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

Posted: 23 Jul 2007

See all articles by Harvey E. Lapan

Harvey E. Lapan

Iowa State University - Department of Economics

GianCarlo Moschini

Iowa State University - Department of Economics

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. and Moschini, GianCarlo, Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products. American Journal of Agricultural Economics, Vol. 89, No. 3, pp. 769-783, August 2007, Available at SSRN: https://ssrn.com/abstract=1002114 or http://dx.doi.org/10.1111/j.1467-8276.2007.01002.x

Harvey E. Lapan (Contact Author)

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States
515 294-5917 (Phone)

GianCarlo Moschini

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States

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