Genetically Modified Crops: Their Market and Welfare Impacts

Sergio Lence and Dermot Hayes

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: A framework is developed for examining the price and welfare effects of the introduction of genetically modified (GM) crops. In the short run, non-GM grain generally becomes another niche product. However, more profound market effects are observed under some reasonable parameterizations. In the long run, consumer and producer welfare are usually greater after the introduction of GM technology. Nevertheless, in all instances some consumers and some producers lose. When identity preservation is expensive and cost savings are relatively small, both producer and consumer welfare are lower after introducing GM technology. Interestingly, this outcome is obtained even though all agents are individually rational.

Date: 2005-11-01
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Related works:
Journal Article: Genetically Modified Crops: Their Market and Welfare Impacts (2005)
Working Paper: Genetically Modified Crops: Their Market and Welfare Impacts (2005)
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