Search results

Purpose – This chapter investigates the role that mandatory genetically modified (GM) labeling versus voluntary labeling has played in the split between those countries with small GM markets and those with large GM markets.

Methodology/approach – Data on product introductions and other market evidence are used to examine market outcomes and identify the likely drivers of GM market bifurcation.

Findings – Labeling has negligible effects on consumer choice or on GM differentiation costs and therefore does not explain the split in GM market outcomes. Other factors have driven market outcomes: namely, consumer confidence in government and the safety of the food supply, competition among manufacturers and retailers, market momentum, and most importantly, the affordability of a non-GM strategy. Ultimately, a non-GM market strategy is feasible only if consumers are willing to cover the additional costs associated with non-GM production and marketing. The two elements composing the cost/price wedge between GM and non-GM products – the cost-reducing benefits of the GM technology and the costs of differentiating non-GM products – therefore play an important role in market outcomes. In the mid-1990s, when producers, manufacturers, and retailers were determining their strategies, neither element was very large. As a result, both GM and non-GM marketing strategies were economically feasible.

Practical implication – Regardless of the labeling regime, changes in the cost/price wedge between GM and non-GM products could change the mix of GM and non-GM products on the market.

Originality/value of paper – This analysis extends the literature by focusing on the impact of labeling regime on both consumer behavior and the cost/price wedge between GM and non-GM products.

Examines three inter‐related facets of environmental pollution: the physiological facet, namely the effect of exposure on health (specifically, morbidity), which has revealed a significant relationship between qualitatively‐defined ambient pollution levels in either respondent′s place of residence or workplace and self‐reported respiratory symptoms and diseases; a behavioural facet, manifested in seeking health care and in restricting normal activity, which has shown significant relationships between mean sulphur dioxide concentrations during a two‐week period preceding the interview and utilization of medical services or restricted activity days over the same period; and an economic facet, which translated these behavioural responses into economic costs, in terms of the value of lost output and additional health‐care resources, and elicited direct estimates of these economic costs in terms of the willingness to pay of households to avoid the health consequences of exposure to pollution. Findings indicate a high degree of consistency among three alternative methods for eliciting willingness to pay, but a sizeable discrepancy between the two approaches to valuing the economic cost. Explains the discrepancy by the different methodological basis of the two approaches.