Economic Effects of Purity Standards in Biotech Labeling Laws
Alexander Magnier and
Konstadinos Mattas Additional contact information Konstantinos Giannakas: University of Nebraska-Lincoln
Nicholas Kalaitzandonakes: University of Missouri
Alexander Magnier: University of Missouri
Konstadinos Mattas: Aristotle University of Thessaloniki
This paper develops a model of heterogeneous consumer preferences and imperfectly competitive suppliers to analyze the market and welfare effects of purity standards for non-GM food products. Analytical results show that purity standards affect the equilibrium prices and quantities of both the GM and non-GM products as well as the welfare of the groups involved. A change in purity standards is shown to create winners and losers among the consumers and the suppliers of the GM and non-GM products. Our analysis provides insights on labeling policies and the position of interest groups in countries with different adoption of, and attitudes towards genetically modified products.