Trade, Standards, and the Political Economy of Genetically Modified Food

A common-agency lobbying model is developed to help understand why North America and the European Union have adopted such different policies toward genetically modified (GM) food. Results show that when firms (in this case farmers) lobby policy ma...

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Bibliographic Details
Main Authors:	Anderson, Kym, Damania, Richard, Jackson, Lee Ann
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, D.C. 2013
Subjects:	ADVERSE IMPACTS AGRICULTURAL ECONOMICS AGRICULTURE BIOTECHNOLOGY CLIMATIC CONDITIONS COMPARATIVE ADVANTAGE CONSUMER PREFERENCES CONSUMERS COST FUNCTIONS COST SAVINGS CROP PRODUCTION CROPS DEVELOPING COUNTRIES ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC MODELS ECONOMIC RESEARCH ECONOMIC WELFARE ECONOMISTS ENVIRONMENTAL COSTS ENVIRONMENTAL EFFECTS ENVIRONMENTAL IMPACT ENVIRONMENTAL IMPACTS ENVIRONMENTAL POLICY EQUILIBRIUM EQUIVALENT VARIATION EXPORTS EXTERNALITIES FARMERS FARMS FOOD POLICY RESEARCH FOOD PRODUCTION FUTURE RESEARCH GENERAL EQUILIBRIUM GENERAL EQUILIBRIUM MODEL HOUSEHOLDS HUNGER IMPORTS INCOMES INDUSTRIAL ECONOMICS INNOVATIONS INTERNATIONAL TRADE INVESTMENT INCENTIVES LAND USE LOBBYISTS MARGINAL BENEFITS MARGINAL COST MONOPOLISTIC COMPETITION NATURAL ENVIRONMENT POLICY DECISIONS POLICY MAKERS POLITICAL ECONOMY POLLUTION PRICE DECLINES PRODUCERS PRODUCT DIFFERENTIATION PRODUCTION COSTS PRODUCTION FUNCTION PRODUCTIVITY PUBLIC GOODS QUALITY STANDARDS REGULATORY REGIMES RENT SEEKING RESOURCE ALLOCATION SAFETY STATIC ANALYSIS TERMS OF TRADE TOTAL FACTOR PRODUCTIVITY TRADE BARRIERS VOTERS WEALTH WELFARE EFFECTS WILLINGNESS TO PAY WORLD TRADE ORGANIZATION WTO
Online Access:	http://documents.worldbank.org/curated/en/2004/09/5126874/trade-standards-political-economy-genetically-modified-food http://hdl.handle.net/10986/14144

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Summary:	A common-agency lobbying model is developed to help understand why North America and the European Union have adopted such different policies toward genetically modified (GM) food. Results show that when firms (in this case farmers) lobby policy makers to influence standards and consumers and environmentalists care about the choice of standard, it is possible that increased competition from abroad can lead to strategic incentives to raise standards, not just lower them as shown in earlier models. We show that differences in comparative advantage in the adoption of GM crops may be sufficient to explain the trans-Atlantic difference in GM policies. On the one hand, farmers in a country with a comparative advantage in GM technology can gain a strategic cost advantage by lobbying for lax controls on GM production and usage at home and abroad. On the other hand, when faced with greater competition, the optimal response of farmers in countries with a comparative disadvantage in GM adoption may be to lobby for more-stringent GM standards. Thus it is rational for producers in the EU (whose relatively small farms would enjoy less gains from the new biotechnology than broad-acre American farms) to reject GM technologies if that enables them and/or consumer and environmental lobbyists to argue for restraints on imports from GM-adopting countries. This theoretical proposition is supported by numerical results from a global general equilibrium model of GM adoption in America without and with an EU moratorium.

Trade, Standards, and the Political Economy of Genetically Modified Food

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