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Comparative Advantage in Demand: Experimental Evidence of Preferences for Genetically Modified Food in the United States and European Union
Author(s) -
Lusk Jayson L.,
Bruce Traill W.,
House Lisa O.,
Valli Carlotta,
Jaeger Sara R.,
Moore Melissa,
Morrow Bert
Publication year - 2006
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.2006.00029.x
Subject(s) - european union , agriculture , economics , comparative advantage , agricultural biotechnology , international trade , consumer demand , genetically modified food , genetically modified organism , international economics , microeconomics , biology , ecology , biochemistry , gene
The United States (US) exports more than US$6 billion in agricultural commodities to the European Union(EU) each year, but one issue carries the potential to diminish this trade: use of biotechnology in food production. The EU has adopted more stringent policies towards biotechnology than the US. Understanding differences in European and American policies towards genetically modified (GM) foods requires a greater understanding of consumers’ attitudes and preferences. This paper reports results from the first large‐scale, cross‐Atlantic study to analyse consumer demand for genetically modified food in a non‐hypothetical market environment. We strongly reject the frequent if convenient assumption in trade theory that consumer preferences are identical across countries: the median level of compensation demanded by English and French consumers to consume a GM food is found to be more than twice that in any of the US locations. Results have important implications for trade theory, which typically focuses on differences in specialization, comparative advantage and factor endowments across countries, and for on‐going trade disputes at the World Trade Organization.