The Economics of GM Labeling and Implications for Trade
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Jill J. McCluskey
Abstract
In this article, we model the effects of both voluntary and mandatory genetically modified (GM) food labeling on profits and consumer welfare. The non-GM firms weakly benefit from having the option to voluntarily label their product and will increase their quantities produced if labeling makes their non-GM product more valuable to consumers relative to the increased costs of labeling. GM producers make lower profits when non-GM firms voluntarily label because of increase in non-GM firms production. Mandatory labeling can be a different scenario. Costs of mandatory labeling are borne by the GM producers, and the benefits are reaped by the non-GM producers as it differentiates their product. We also consider the possibility that consumers will view the mandatory GM labels as a warning, such as a mandatory health label on cigarettes. The combination of increased costs along with decreased willingness to pay could be damaging to GM producers. The level of consumer concern about consuming GM food greatly affects the impact of labeling policies. Coordination of policies for a trade agreement will have different effects depending on consumer risk perceptions in that country and the number of GM firms.
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Appendix
To find the marginal effect of labeling on welfare, we differentiate eq. 13such that
We note that
The effects of mandatory labeling on welfare are found similarly to the effects of voluntary labeling.
© 2017 Walter de Gruyter GmbH, Berlin/Boston
Artikel in diesem Heft
- Implications of TTIP and TPP for GM/non-GM Coexistence
- Labeling Demands, Coexistence and the Challenges for Trade
- Food Labels, Information, and Trade in GMOs
- Approaches to Set Rules for Trade in the Products of Agricultural Biotechnology. Is Harmonization under Trans-Pacific Partnership Possible?
- The Trans-Pacific Partnership and Japan’s Agricultural Trade
- The Effects of T-TIP Market Access Reform on EU Beef Import Demand
- The Economics of GM Labeling and Implications for Trade
- The Product Line Strategy of a Company Selling Seed with a Licensed GM Trait
Artikel in diesem Heft
- Implications of TTIP and TPP for GM/non-GM Coexistence
- Labeling Demands, Coexistence and the Challenges for Trade
- Food Labels, Information, and Trade in GMOs
- Approaches to Set Rules for Trade in the Products of Agricultural Biotechnology. Is Harmonization under Trans-Pacific Partnership Possible?
- The Trans-Pacific Partnership and Japan’s Agricultural Trade
- The Effects of T-TIP Market Access Reform on EU Beef Import Demand
- The Economics of GM Labeling and Implications for Trade
- The Product Line Strategy of a Company Selling Seed with a Licensed GM Trait
