Monopolization and the regulation of genetically modified crops: an economic model

Abstract

Although genetically modified organisms (GMOs) have recently attracted a great deal of public attention, analysis of their economic impact has been far less common. This paper puts forward variants of a simple model of crop production, each one tailored to a particular aspect of transgenic food technology. The focus is on the possibility of monopolization and its consequential welfare costs. Risk factors identified include moderate cost savings from transgenic varieties, high seed storage costs, and high risks of crop loss. The paper also discusses some of the possible remedies including tighter regulation of anti-competitive practices and liberalization of the regulations governing the introduction of new GMOs.