Differentiating the consumer benefits from labeling of GM food products

Although recurrent evidence is found that consumers have different willingness to pay for GM and non-GM products, there is disagreement in the scientific community about the size of consumer benefits from GM labeling. In this article we use a theoretical model based on a standard constant elasticity of substitution (CES) to explain the importance of the quality effect. It is shown that failing to consider the quality effect may yield an overestimation of benefits from GM labeling, voluntary or mandatory.

[1]  Kristine M. Grimsrud,et al.  Policies and Attitudes toward Genetically Modified foods in Norway , 2004 .

[2]  Tirtha Dhar,et al.  Milk by Any Other Name … Consumer Benefits from Labeled Milk , 2005 .

[3]  Peter W. B. Phillips,et al.  GMO labeling: threat or opportunity? , 1998 .

[4]  J. Richardson.  Beyond (but back to?) the elasticity of substitution in international trade , 1973 .

[5]  H. Hotelling.  Stability in Competition , 1929 .

[6]  Peter W. B. Phillips,et al.  A Survey of National Labeling Policies for GM Foods , 2000 .

[7]  A. Shaked,et al.  Relaxing price competition through product differentiation , 1982 .

[8]  Jacques-François Thisse,et al.  Price competition, quality and income disparities , 1979 .

[9]  Hans Degryse,et al.  On the interaction between vertical and horizontal product differentiation : An application to banking , 1996 .

[10]  A. Dixit,et al.  Monopolistic competition and optimum product diversity , 1977 .

[11]  M. Spence.  Product Selection, Fixed Costs, and Monopolistic Competition , 1976 .

[12]  Will consumers lose or gain from the environmental impacts of transgenic crops , 2005 .

[13]  Paul S. Armington.  A Theory of Demand for Products Distinguished by Place of Production (Une théorie de la demande de produits différenciés d'après leur origine) (Una teoría de la demanda de productos distinguiéndolos según el lugar de producción) , 1969 .

[14]  D. Rigby,et al.  Consumer attitudes to genetically modified organisms in food in the UK , 2001 .

[15]  Matthew C. Rousu,et al.  Should the United States Regulate Mandatory Labeling for Genetically Modified Foods , 2002 .

[16]  Andrew Caplin,et al.  Aggregation and Imperfect Competition: On the Existence of Equilibrium , 1991 .

[17]  J. McCluskey,et al.  Effects of Information on Consumers' Willingness to Pay for GM-Corn-Fed Beef , 2004 .

[18]  J. Baker.  Product Differentiation through Space and Time: Some Antitrust Policy Issues , 1997 .

[19]  Matthew C. Rousu,et al.  Consumer's Resistance to Genetically Modified Foods: The Role of Information in an Uncertain Environment , 2004 .

[20]  S. Marette,et al.  “Does Contain” vs. “Does Not Contain”: Does it Matter which GMO Label is Used? , 2003 .

[21]  Matthew C. Rousu,et al.  GM Food Labeling Policies of the U.S. and Its Trading Partners , 2001 .

[22]  Stéphane Robin,et al.  Do Consumers Really Refuse to Buy Genetically Modified Food? , 2004 .

[23]  J. Muellbauer,et al.  An Almost Ideal Demand System , 1980 .

[24]  N. Economides.  QUALITY VARIATIONS AND MAXIMAL VARIETY DIFFERENTIATION , 1989 .

[25]  S. Jaeger,et al.  Effect of information about benefits of biotechnology on consumer acceptance of genetically modified food: evidence from experimental auctions in the United States, England, and France , 2004 .

[26]  Kristine M. Grimsrud,et al.  Consumer Response to Genetically Modified Food Products in Japan , 2003, Agricultural and Resource Economics Review.

[27]  Mari L Stull.  VOLUNTARY LABELING OF FOODSTUFFS DERIVED FROM MODERN BIOTECHNOLOGY , 2000 .

[28]  Kenneth A. Reinert,et al.  Armington Models and Terms-of-Trade Effects: Some Econometric Evidence for North America , 1993 .

[29]  B. Larue,et al.  Consumer Response to Functional Foods Produced by Conventional, Organic, or Genetic Manipulation , 2004 .

[30]  Robert E. Evenson,et al.  Willingness to pay for GM foods: results from a public survey in the USA. , 2004 .

[31]  D. Jorgenson,et al.  Transcendental Logarithmic Utility Functions , 1975 .

[32]  W. Adamowicz,et al.  Labelling Genetically Modified Food: Heterogeneous Consumer Preferences and the Value of Information , 2005 .

[33]  J. Wesseler.  Transgenic Crops: Can European Consumers Benefit from Eating them and will they want to? , 2002 .

[34]  J. Caswell.  Labeling policy for GMOs: to each his own? , 2000 .

[35]  Edward J. Balistreri,et al.  A review of Armington trade substitution elasticities , 2003 .

[36]  Takatoshi Tabuchi,et al.  Two-stage two-dimensional spatial competition between two firms , 1994 .

[37]  Gregory K. Leonard,et al.  The Competitive Effects of a New Product Introduction: A Case Study , 2003 .

[38]  Thomas P. Lyon,et al.  Strategic Quality Choice with Minimum Quality Standards , 1998 .