Premium
Genetically Modified Crops: Their Market and Welfare Impacts
Author(s) -
Lence Sergio H.,
Hayes Dermot J.
Publication year - 2005
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/j.1467-8276.2005.00779.x
Subject(s) - welfare , economics , production (economics) , aggregate (composite) , product (mathematics) , microeconomics , economic surplus , natural resource economics , market economy , materials science , geometry , mathematics , composite material
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.