Files
Abstract
The paper develops a theoretical framework of heterogeneous consumers and producers
to examine the market and welfare effects of the introduction of variety-level genetic use
restriction technologies (V-GURTs) under the current No-Labeling regime of GMPs in
the US market. Specifically, the study examines how the agronomic characteristics of
GURTs, consumer perceptions and preferences regarding interventions in the production
process (i.e., genetic modification) and producer cost structures (e.g., dependency on
saving seed) affect the adoption of the technology by producers, the market acceptance of
GURTs by consumers and consequently the innovator's incentive to introduce the new
technology. Analytical results show that the introduction of GURTs may be welfare
enhancing for consumers, producers and innovating firms when consumer aversion to
GURTs is low, the agronomic benefits of the GURTs crop are high, and the expected
penalty producers face when they cheat on their GM licensing agreements (e.g., due to
inefficient or costly monitoring) is low.