Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products |
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Authors: | Harvey Lapan GianCarlo Moschini |
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Institution: | Harvey Lapan is University Professor and GianCarlo Moschini is professor and Pioneer Chair in Science and Technology Policy, and both are with the Department of Economics, Iowa State University. |
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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. |
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Keywords: | biotechnology food labeling grading identity preservation minimum quality standards regulation uncertainty |
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