Abstract In this article, we model the effects of both voluntary and mandatory genetically modified (GM) food labeling on profits and consumer welfare. The non-GM firms weakly benefit from having the option to voluntarily label their product and will increase their quantities produced if labeling makes their non-GM product more valuable to consumers relative to the increased costs of labeling. GM producers make lower profits when non-GM firms voluntarily label because of increase in non-GM firms production. Mandatory labeling can be a different scenario. Costs of mandatory labeling are borne by the GM producers, and the benefits are reaped by the non-GM producers as it differentiates their product. We also consider the possibility that consumers will view the mandatory GM labels as a warning, such as a mandatory health label on cigarettes. The combination of increased costs along with decreased willingness to pay could be damaging to GM producers. The level of consumer concern about consuming GM food greatly affects the impact of labeling policies. Coordination of policies for a trade agreement will have different effects depending on consumer risk perceptions in that country and the number of GM firms.
{"title":"The Economics of GM Labeling and Implications for Trade","authors":"J. McCluskey, Jason A. Winfree","doi":"10.1515/jafio-2016-0017","DOIUrl":"https://doi.org/10.1515/jafio-2016-0017","url":null,"abstract":"Abstract In this article, we model the effects of both voluntary and mandatory genetically modified (GM) food labeling on profits and consumer welfare. The non-GM firms weakly benefit from having the option to voluntarily label their product and will increase their quantities produced if labeling makes their non-GM product more valuable to consumers relative to the increased costs of labeling. GM producers make lower profits when non-GM firms voluntarily label because of increase in non-GM firms production. Mandatory labeling can be a different scenario. Costs of mandatory labeling are borne by the GM producers, and the benefits are reaped by the non-GM producers as it differentiates their product. We also consider the possibility that consumers will view the mandatory GM labels as a warning, such as a mandatory health label on cigarettes. The combination of increased costs along with decreased willingness to pay could be damaging to GM producers. The level of consumer concern about consuming GM food greatly affects the impact of labeling policies. Coordination of policies for a trade agreement will have different effects depending on consumer risk perceptions in that country and the number of GM firms.","PeriodicalId":52541,"journal":{"name":"Journal of Agricultural and Food Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2017-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jafio-2016-0017","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41564596","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The economic impact of Genetically Modified Organisms (GMOs) depends heavily on the product line supplied by the seed companies. In this paper, we analyze the interlinking between seed product line and license contract signed between the seed company and the upstream agbiotech firm which owns the Genetically Modified (GM) trait. We show that if the farmers are sufficiently heterogeneous, the seed company prefers to price discriminate by supplying both GM and conventional seeds. In those circumstances, despite higher efficiency of the GM seed, the price increase is such that the farmer’s surplus decreases. This loss may even outweigh the aggregate gains of the seed and the agbiotech companies, thereby leading to a total welfare loss.
{"title":"The Product Line Strategy of a Company Selling Seed with a Licensed GM Trait","authors":"S. Lemarié, D. Baghdasaryan, Etienne Campens","doi":"10.1515/jafio-2016-0030","DOIUrl":"https://doi.org/10.1515/jafio-2016-0030","url":null,"abstract":"Abstract The economic impact of Genetically Modified Organisms (GMOs) depends heavily on the product line supplied by the seed companies. In this paper, we analyze the interlinking between seed product line and license contract signed between the seed company and the upstream agbiotech firm which owns the Genetically Modified (GM) trait. We show that if the farmers are sufficiently heterogeneous, the seed company prefers to price discriminate by supplying both GM and conventional seeds. In those circumstances, despite higher efficiency of the GM seed, the price increase is such that the farmer’s surplus decreases. This loss may even outweigh the aggregate gains of the seed and the agbiotech companies, thereby leading to a total welfare loss.","PeriodicalId":52541,"journal":{"name":"Journal of Agricultural and Food Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2017-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jafio-2016-0030","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66825604","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Given the absence of progress toward a multilateral agreement on trade liberalization in the WTO’s Doha Round, countries are attempting to gain the perceived gains from trade through the negotiation of preferential trade agreements. One of the most ambitious attempts to negotiate a preferential agreement is the Trans Pacific Partnership (TPP) which encompasses 12 countries across the Pacific including both the US and Japan. The TPP members account for approximately 40 % of global GDP. One of the most difficult issues in current international trade policy is the regulation of trade in the products of modern agricultural biotechnology. This question was on the negotiating agenda of the TPP. The objective of this paper is to lay out the major issues in the trade of products of modern agricultural biotechnology and examines the regulatory regimes for biotechnology in the 12 TPP countries. It finds that there is a significant divergence in the approaches to regulating genetically modified organisms (GMOs) across the TPP countries. As a result, the development of a harmonized regulatory regime to govern trade in GMOs was impossible directly in the TPP. A forum where the development of a harmonized system could potentially be undertaken was, however, agreed in the TPP.
{"title":"Approaches to Set Rules for Trade in the Products of Agricultural Biotechnology. Is Harmonization under Trans-Pacific Partnership Possible?","authors":"C. Viju, W. Kerr, S. Smyth","doi":"10.1515/jafio-2016-0016","DOIUrl":"https://doi.org/10.1515/jafio-2016-0016","url":null,"abstract":"Abstract Given the absence of progress toward a multilateral agreement on trade liberalization in the WTO’s Doha Round, countries are attempting to gain the perceived gains from trade through the negotiation of preferential trade agreements. One of the most ambitious attempts to negotiate a preferential agreement is the Trans Pacific Partnership (TPP) which encompasses 12 countries across the Pacific including both the US and Japan. The TPP members account for approximately 40 % of global GDP. One of the most difficult issues in current international trade policy is the regulation of trade in the products of modern agricultural biotechnology. This question was on the negotiating agenda of the TPP. The objective of this paper is to lay out the major issues in the trade of products of modern agricultural biotechnology and examines the regulatory regimes for biotechnology in the 12 TPP countries. It finds that there is a significant divergence in the approaches to regulating genetically modified organisms (GMOs) across the TPP countries. As a result, the development of a harmonized regulatory regime to govern trade in GMOs was impossible directly in the TPP. A forum where the development of a harmonized system could potentially be undertaken was, however, agreed in the TPP.","PeriodicalId":52541,"journal":{"name":"Journal of Agricultural and Food Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2017-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jafio-2016-0016","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66825552","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper develops estimates of price elasticity of demand for a sample of U.S. food and tobacco manufacturing industries and tests a model explaining differences in interindustry elasticity. The empirical results are consistent with the hypothesis that demand elasticity is in part determined by the competitive behavior of firms in an industry. In particular, high advertising expenditures result in lower elasticities of demand. Other important variables influencing demand elasticity are industry concentration, the stage of production, the existence of protection from domestic and foreign entry, and the extent of new-product introduction in a particular market. ‘What makes monopoly possible is the efficiency of large-scale operation; what makes it worthwhile is the slope of the demand curve’ [Dorfman (1978, p. 153)].
{"title":"What Determines the Elasticity of Industry Demand?","authors":"Emilio Pagoulatos, Robert L. Sorensen","doi":"10.1515/jafio-2017-0041","DOIUrl":"https://doi.org/10.1515/jafio-2017-0041","url":null,"abstract":"This paper develops estimates of price elasticity of demand for a sample of U.S. food and tobacco manufacturing industries and tests a model explaining differences in interindustry elasticity. The empirical results are consistent with the hypothesis that demand elasticity is in part determined by the competitive behavior of firms in an industry. In particular, high advertising expenditures result in lower elasticities of demand. Other important variables influencing demand elasticity are industry concentration, the stage of production, the existence of protection from domestic and foreign entry, and the extent of new-product introduction in a particular market. ‘What makes monopoly possible is the efficiency of large-scale operation; what makes it worthwhile is the slope of the demand curve’ [Dorfman (1978, p. 153)].","PeriodicalId":52541,"journal":{"name":"Journal of Agricultural and Food Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2017-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jafio-2017-0041","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66825968","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract As with other facets of regulatory policy for genetically modified organisms, labeling is a contentious issue in international trade policy. Labeling can be a trade barrier. The existing multilateral system for labeling is based in the Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) agreements of the World Trade Organization (WTO) – and is focused on limiting the rent-seeking trade inhibiting aspects of labeling. An alternative view of labeling is based on the social policy of consumers’ right to know and takes no account of the trade costs associated with labeling. The labeling rules of the SPS and TBT are explained. These are contrasted with the trade effects of a labeling system based on consumers’ right to know that might be incorporated into a preferential trade agreement. The relative economic effects are explained and contrasted with those of the social policy of coexistence. The difficulties arising from some trading partners using the labeling rules of a preferential trade agreement while others use those of the WTO are outlined. The likelihood of alternative rules for labeling being included in the Transatlantic Trade and Investment Partnership (T-TIP), the Trans-Pacific Partnership (TPP) and the Comprehensive Economic and Trade Agreement (CETA) are examined.
{"title":"Labeling Demands, Coexistence and the Challenges for Trade","authors":"S. Smyth, W. Kerr, P. Phillips","doi":"10.1515/jafio-2016-0015","DOIUrl":"https://doi.org/10.1515/jafio-2016-0015","url":null,"abstract":"Abstract As with other facets of regulatory policy for genetically modified organisms, labeling is a contentious issue in international trade policy. Labeling can be a trade barrier. The existing multilateral system for labeling is based in the Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) agreements of the World Trade Organization (WTO) – and is focused on limiting the rent-seeking trade inhibiting aspects of labeling. An alternative view of labeling is based on the social policy of consumers’ right to know and takes no account of the trade costs associated with labeling. The labeling rules of the SPS and TBT are explained. These are contrasted with the trade effects of a labeling system based on consumers’ right to know that might be incorporated into a preferential trade agreement. The relative economic effects are explained and contrasted with those of the social policy of coexistence. The difficulties arising from some trading partners using the labeling rules of a preferential trade agreement while others use those of the WTO are outlined. The likelihood of alternative rules for labeling being included in the Transatlantic Trade and Investment Partnership (T-TIP), the Trans-Pacific Partnership (TPP) and the Comprehensive Economic and Trade Agreement (CETA) are examined.","PeriodicalId":52541,"journal":{"name":"Journal of Agricultural and Food Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2017-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jafio-2016-0015","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66825546","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This article focuses on the economics of labeling of genetically modified (GM) products in an international trade context with coexistence of both GM and traditional products and asymmetric information. Even though the scientific consensus is that GM food products are safe for human consumption, there has been a lack of acceptance by a growing segment of consumers, which has resulted in reduced or curbed demand for GM food products. The size of the anti-GM consumer segment differs across countries and suggests that coexistence will continue in a subset of countries for the near future. Many countries have developed regulations, approval processes, and labelling policies that largely reflect the economics and politics specific to each country. Hence, different labeling policies have emerged across countries. These differences in policies will continue to create difficulties, and may lead to the dominance of private standards.
{"title":"Food Labels, Information, and Trade in GMOs","authors":"W. Huffman, J. McCluskey","doi":"10.1515/jafio-2016-0038","DOIUrl":"https://doi.org/10.1515/jafio-2016-0038","url":null,"abstract":"Abstract This article focuses on the economics of labeling of genetically modified (GM) products in an international trade context with coexistence of both GM and traditional products and asymmetric information. Even though the scientific consensus is that GM food products are safe for human consumption, there has been a lack of acceptance by a growing segment of consumers, which has resulted in reduced or curbed demand for GM food products. The size of the anti-GM consumer segment differs across countries and suggests that coexistence will continue in a subset of countries for the near future. Many countries have developed regulations, approval processes, and labelling policies that largely reflect the economics and politics specific to each country. Hence, different labeling policies have emerged across countries. These differences in policies will continue to create difficulties, and may lead to the dominance of private standards.","PeriodicalId":52541,"journal":{"name":"Journal of Agricultural and Food Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2017-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jafio-2016-0038","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66825682","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The purpose of this special issue is to examine the interplay between TTIP/TPP and the regulation of sanitary and phytosanitary practices, with a special focus on the interplay between of the trade negotiations and GMO/Non-GMO coexistence in commodity and food marketing chains. Seven articles dealing with the intersection between trade negotiations and GMO/non-GMO existence follow.
{"title":"Implications of TTIP and TPP for GM/non-GM Coexistence","authors":"D. S. Bullock, Norbert L. W. Wilson","doi":"10.1515/jafio-2017-0013","DOIUrl":"https://doi.org/10.1515/jafio-2017-0013","url":null,"abstract":"Abstract The purpose of this special issue is to examine the interplay between TTIP/TPP and the regulation of sanitary and phytosanitary practices, with a special focus on the interplay between of the trade negotiations and GMO/Non-GMO coexistence in commodity and food marketing chains. Seven articles dealing with the intersection between trade negotiations and GMO/non-GMO existence follow.","PeriodicalId":52541,"journal":{"name":"Journal of Agricultural and Food Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2017-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jafio-2017-0013","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66825746","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract To commemorate and recognize four decades of research, teaching and mentoring by Professor Emilio Pagoulatos, we compiled a volume of articles in his honor. His legacy spans four U.S. universities and a second generation of scholars. This volume contains a sample of the extensive work he co-authored or influenced in the area of agricultural and food industrial organization.
{"title":"Introduction to the Special Issue in Honor of Professor Emilio Pagoulatos","authors":"Elena López, R. Lopez","doi":"10.1515/jafio-2017-0032","DOIUrl":"https://doi.org/10.1515/jafio-2017-0032","url":null,"abstract":"Abstract To commemorate and recognize four decades of research, teaching and mentoring by Professor Emilio Pagoulatos, we compiled a volume of articles in his honor. His legacy spans four U.S. universities and a second generation of scholars. This volume contains a sample of the extensive work he co-authored or influenced in the area of agricultural and food industrial organization.","PeriodicalId":52541,"journal":{"name":"Journal of Agricultural and Food Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2017-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jafio-2017-0032","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66825911","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The objective of this study is to assess the degree and the structure of price dependence between different cuts of the beef industry in the USA. This is pursued using the statistical tool of copulas. To this end, it utilizes retail monthly data of beef cuts, within and between the quality grades of Choice and Select, over the period 2000–2014. For the Choice quality grade, there was evidence of asymmetric price co-movements between all six pairs of beef cuts under consideration. No evidence of asymmetric price co-movements was found between the three pairs of beef cuts for the Select quality grade. For the pairs of beef cuts formed between the Choice and Select quality grades, the empirical results point to the existence of price asymmetry only for the case of the chuck roast cut.
{"title":"Price Dependence between Different Beef Cuts and Quality Grades: A Copula Approach at the Retail Level for the U.S. Beef Industry","authors":"Dimitrios K. Panagiotou, A. Stavrakoudis","doi":"10.1515/jafio-2015-0001","DOIUrl":"https://doi.org/10.1515/jafio-2015-0001","url":null,"abstract":"Abstract The objective of this study is to assess the degree and the structure of price dependence between different cuts of the beef industry in the USA. This is pursued using the statistical tool of copulas. To this end, it utilizes retail monthly data of beef cuts, within and between the quality grades of Choice and Select, over the period 2000–2014. For the Choice quality grade, there was evidence of asymmetric price co-movements between all six pairs of beef cuts under consideration. No evidence of asymmetric price co-movements was found between the three pairs of beef cuts for the Select quality grade. For the pairs of beef cuts formed between the Choice and Select quality grades, the empirical results point to the existence of price asymmetry only for the case of the chuck roast cut.","PeriodicalId":52541,"journal":{"name":"Journal of Agricultural and Food Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2016-12-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jafio-2015-0001","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66825653","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This study derives a general characterization of the misalignment between socially and privately optimal spatial pricing in an uncontested procurement market. In doing so it clarifies the link between firm-gate price markdown (pricing the input below its marginal value product at the firm’s location) and spatial price discrimination (varying markdown by distance). We subsequently examine the implications of our results for regulatory prescriptions. Our analysis reveals that, in the absence of regulation, increased firm-gate price markdown is necessarily accompanied by intensified spatial price discrimination, and that discrimination is always conducted against nearby producers. We find that if regulation targets price markdown at the firm gate, then spatial price discrimination is also inhibited resulting in welfare gains. In contrast, directly targeting spatial price discrimination (as generally prescribed by enacted and proposed legislation) cannot attain a first best, and may in fact result in efficiency losses relative to the unregulated equilibrium.
{"title":"Spatial Pricing in Uncontested Procurement Markets: Regulatory Implications","authors":"Juan P. Sesmero","doi":"10.1515/jafio-2016-0013","DOIUrl":"https://doi.org/10.1515/jafio-2016-0013","url":null,"abstract":"Abstract This study derives a general characterization of the misalignment between socially and privately optimal spatial pricing in an uncontested procurement market. In doing so it clarifies the link between firm-gate price markdown (pricing the input below its marginal value product at the firm’s location) and spatial price discrimination (varying markdown by distance). We subsequently examine the implications of our results for regulatory prescriptions. Our analysis reveals that, in the absence of regulation, increased firm-gate price markdown is necessarily accompanied by intensified spatial price discrimination, and that discrimination is always conducted against nearby producers. We find that if regulation targets price markdown at the firm gate, then spatial price discrimination is also inhibited resulting in welfare gains. In contrast, directly targeting spatial price discrimination (as generally prescribed by enacted and proposed legislation) cannot attain a first best, and may in fact result in efficiency losses relative to the unregulated equilibrium.","PeriodicalId":52541,"journal":{"name":"Journal of Agricultural and Food Industrial Organization","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2016-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/jafio-2016-0013","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66825545","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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