Competition with Mandatory Labeling of Genetically Modified Products

Linda A. Toolsema

Journal of Institutional and Theoretical Economics (JITE), 2008, vol. 164, issue 3, 429-448

Abstract: A vertical differentiation model is analyzed to study the placing on the market of genetically modified (GM) products in a context where labeling of such products is mandatory, as it is in the European Union. The model has two stages: firms first choose their technology (either GM or conventional) and then compete. We assume the GM product to have lower marginal cost, and lower value to consumers. We analyze technology choice as well as the effects of introducing the GM product on competitive behavior. In particular, we study implications for output levels, prices, and social welfare. We also discuss contamination of conventional goods.

JEL-codes: D43 L13 L15 O33 Q10 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (7)

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