Genetically Modified Crops: Their Market and Welfare Impacts

20 Pages Posted: 21 Apr 2020

See all articles by Sergio H. Lence

Sergio H. Lence

Iowa State University - Department of Economics

Dermot J. Hayes

Iowa State University

Multiple version iconThere are 2 versions of this paper

Date Written: November 2005

Abstract

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.

Keywords: Bt corn, genetically modified crops, identity preservation, welfare

Suggested Citation

Lence, Sergio H. and Hayes, Dermot J., Genetically Modified Crops: Their Market and Welfare Impacts (November 2005). American Journal of Agricultural Economics, Vol. 87, Issue 4, pp. 931-950, 2005, Available at SSRN: https://ssrn.com/abstract=3581157 or http://dx.doi.org/10.1111/j.1467-8276.2005.00779.x

Sergio H. Lence (Contact Author)

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States

Dermot J. Hayes

Iowa State University

613 Wallace Road
Ames, IA 50011-2063
United States

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