Journal
AMERICAN JOURNAL OF AGRICULTURAL ECONOMICS
Volume 87, Issue 4, Pages 931-950Publisher
WILEY
DOI: 10.1111/j.1467-8276.2005.00779.x
Keywords
Bt corn; genetically modified crops; identity preservation; welfare
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A framework is developed for examining price and welfare effects of the introduction of genetically modified (GM) products. In the short run, non-GM grain generally becomes another identity-preserved product. However, more profound market effects are observed under some reasonable parameterizations. When calibrated to reflect the U.S. corn market, introducing GM technology increases aggregate welfare over a wide range of scenarios, unless the corresponding production cost savings are small and consumers are seriously concerned about GM products. The possibility that GM technology may reduce aggregate welfare is interesting because the model assumes rational agents and does not include regulatory constraints.
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