DP4526 Trade Standards and the Political Economy of Genetically Modified Food

Author(s): Kym Anderson, Richard Damania, Lee Ann Jackson
Publication Date: August 2004
Keyword(s): GMOs, Political Economy, Regulation of Standards, Trade Policy
JEL(s): F13, O33, O38, Q17, Q18
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4526

A common-agency lobbying model is developed to help understand why North America and the European Union have adopted such different policies towards genetically modified food. Our 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. 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.