This paper develops a model of heterogeneous consumer preferences and imperfectly competitive suppliers to analyze the market and welfare effects of purity standards for non-GM food products. Analytical results show that purity standards affect the equilibrium prices and quantities of both the GM and non-GM products as well as the welfare of the groups involved. A change in purity standards is shown to create winners and losers among the consumers and the suppliers of the GM and non-GM products. Our analysis provides insights on labeling policies and the position of interest groups in countries with different adoption of, and attitudes towards genetically modified products.
Journal of Agricultural & Food Industrial Organization (JAFIO) is a unique forum for empirical and theoretical research in industrial organization with a special focus on agricultural and food industries worldwide. JAFIO is the only international journal devoted solely to theoretical and empirical industrial organization as applied to agricultural and food systems which link input suppliers, farmers, processors, and retailers.