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Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products

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  • Lapan, Harvey E.
  • Moschini, GianCarlo

Abstract

We relate the labeling of genetically modified (GM) products to the theory of grading and minimum quality standards. The model represents three stages in the supply chain, assumes a vertical product differentiation framework, allows for the accidental commingling of non-GM products, and treats regulation as a purity threshold for non-GM products. We find that a non-GM purity level that is too strict leads to the disappearance of the non-GM product, and that some quality standard benefits farmers. Indeed, the standard that is optimal from the perspective of producers is stricter than what is optimal for consumers and for societal welfare.

Suggested Citation

  • Lapan, Harvey E. & Moschini, GianCarlo, 2006. "Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products," Staff General Research Papers Archive 12553, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:12553
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    References listed on IDEAS

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    Cited by:

    1. Hu, Wuyang & Woods, Timothy & Bastin, Sandra & Cox, Linda & You, Wen, 2011. "Assessing Consumer Willingness to Pay for Value-Added Blueberry Products Using a Payment Card Survey," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 43(2), pages 243-258, May.
    2. Sai Bravo & Carole Haritchabalet, 2021. "Certification of low-carbon hydrogen in the transport market," Working Papers hal-03371277, HAL.
    3. GianCarlo Moschini, 2008. "Biotechnology and the development of food markets: retrospect and prospects," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 35(3), pages 331-355, September.
    4. Marion Desquilbet & Sylvaine Poret, 2014. "How do GM/non GM coexistence regulations affect markets and welfare?," European Journal of Law and Economics, Springer, vol. 37(1), pages 51-82, February.
    5. Bansal, Sangeeta & Chakravarty, Sujoy & Ramaswami, Bharat, 2013. "The informational and signaling impacts of labels: experimental evidence from India on GM foods," Environment and Development Economics, Cambridge University Press, vol. 18(6), pages 701-722, December.
    6. Hajderllari, Eliona & Karantininis, Kostas, 2011. "Genetically modified foods in vertically differentiated and vertically oligopolistic markets," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114774, European Association of Agricultural Economists.
    7. Olivier Bonroy & Christos Constantatos, 2015. "On the Economics of Labels: How Their Introduction Affects the Functioning of Markets and the Welfare of All Participants," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 239-259.
    8. Giannakas Konstantinos & Kalaitzandonakes Nicholas & Magnier Alexander & Mattas Konstadinos, 2011. "Economic Effects of Purity Standards in Biotech Labeling Laws," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 9(1), pages 1-47, April.
    9. repec:gbl:wpaper:2013-01 is not listed on IDEAS
    10. Marco J. W. Kotschedoff & Max J. Pachali, 2020. "Higher Minimum Quality Standards and Redistributive Effects on Consumer Welfare," Marketing Science, INFORMS, vol. 39(1), pages 253-280, January.
    11. Lapan, Harvey & Moschini, GianCarlo, 2009. "Quality certification standards in competitive markets: When consumers and producers (dis)agree," Economics Letters, Elsevier, vol. 104(3), pages 144-147, September.
    12. McCluskey Jill J. & Winfree Jason, 2017. "The Economics of GM Labeling and Implications for Trade," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 15(1), pages 1-7, January.
    13. Morales, Luis Emilio & Hoang, Nam & Stuen, Eric, 2017. "Spatial price premium transmission for Meat Standards Australia-graded cattle: the vulnerability of price premiums to outside shocks," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 61(4), October.
    14. Marion Desquilbet & Sylvaine Poret, 2015. "How do GM / non GM coexistence regulations affect markets and welfare?," Working Papers hal-00956039, HAL.
    15. Caputo, Vincenzina & Scarpa, Riccardo & Nayga, Rodolfo M. & Ortega, David L., 2018. "Are preferences for food quality attributes really normally distributed? An analysis using flexible mixing distributions," Journal of choice modelling, Elsevier, vol. 28(C), pages 10-27.
    16. Sai Bravo & Carole Haritchabalet, 2021. "Certification of low-carbon hydrogen in the transport market," Working papers of Transitions Energétiques et Environnementales (TREE) hal-03371277, HAL.
    17. Bonroy, Olivier & Lemarié, Stéphane, 2012. "Downstream labeling and upstream price competition," European Economic Review, Elsevier, vol. 56(3), pages 347-360.
    18. Colson, Gregory, 2009. "Improving nutrient content through genetic modification: Evidence from experimental auctions on consumer acceptance and willingness to pay for intragenic foods," ISU General Staff Papers 200901010800001872, Iowa State University, Department of Economics.
    19. D. Mark Anderson & Kerwin Kofi Charles & Michael McKelligott & Daniel I. Rees, 2022. "Safeguarding Consumers Through Minimum Quality Standards: Milk Inspections and Urban Mortality, 1880-1910," NBER Working Papers 30063, National Bureau of Economic Research, Inc.
    20. Anderson, D. Mark & Charles, Kerwin Kofi & McKelligott, Michael & Rees, Daniel I., 2022. "Safeguarding Consumers through Minimum Quality Standards: Milk Inspections and Urban Mortality, 1880-1910," IZA Discussion Papers 15295, Institute of Labor Economics (IZA).
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