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Some simple economics of GM food

Dietmar Harhoff (), Pierre Regibeau () and Katharine Rockett

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: Public opposition to the genetic engineering of food crops (GM food) hasnot been based solely on concern about biological risks. Economic riskshave been widely cited too: the fear that the world’s food supply willbe concentrated in the hands of a few large firms, the fear that suchfirms will engage or are already engaging in anti-competitive practices,and the fear of the transfer of ownership rights over genetic resourcesto the private sector. Are these fears justified? We argue that the GMfood industry may be on course for further consolidation, and this couldbe anti-competitive. In fact, policymakers face a dilemma: a stringentregulatory approval process enhances food safety, but at the cost ofincreasing market concentration. We argue also that the integration ofseed and agri-chemical manufacturers may bias the introduction of GMtraits in undesirable directions. Some business practices (stick astie-in contracts between seeds and complementary products such asherbicides) may have an exclusionary motive that warrants scrutiny onanti-competitive grounds, while some other practices (such as the use ofterminator genes) appear more benign. Finally, we argue against grantingpatents on genes or even on gene ‘functions’. Doing so may delay thedevelopment of socially beneficial applications.

Date: 2001
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Published in Economic Policy 33 16(2001): pp. 263-299

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