Innovation and Trade with Endogenous Market Failure: The Case of Genetically Modified Products

Posted: 6 Jul 2004

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

A partial-equilibrium, two-country model is developed to analyze implications from the introduction of genetically modified (GM) products. In the model, innovators hold proprietary rights, farmers are (competitive) adopters, some consumers deem GM food to be inferior in quality to traditional food, and the mere introduction of GM crops affects the costs of non-GM food (because of costly identity preservation). Among the results derived, it is shown that, although GM innovations have the potential to improve efficiency, some groups can be made worse off. Indeed, it is even possible that the costs induced by GM innovations outweigh the efficiency gains.

Keywords: Biotechnology, food labeling, identity preservation, innovations, intellectual property rights, international trade, nontarriff barriers, regulation

Suggested Citation

Lapan, Harvey E. and Moschini, GianCarlo, Innovation and Trade with Endogenous Market Failure: The Case of Genetically Modified Products. Available at SSRN: https://ssrn.com/abstract=556844

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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