Abstract:
Both at home and abroad concerns about genetically modified foods have disrupted food markets and raised a
number of problems for international trade. This paper addresses the issue of labeling foods produced using genetically
modified ingredients from an economic perspective. The wide range of consumer attitudes with respect to food safety and
genetically modified foods highlights the need for research into how consumer attitudes toward food are established.
Consumer attitudes toward genetically modified foods span the distance from profound fear to unflinching acceptance - a
divergence in attitudes that can not be explained by variations in preferences. The debate generated by genetically modified
foods also focuses attention on how consumer attitudes influence agricultural and food markets. In the case of genetically
modified foods, a seemingly small demand for non-genetically modified foods has triggered a number of market changes. For
example, a number of food manufacturers have begun to market non-genetically modified food products, and a number of
elevators and processors have begun to segregate genetically modified varieties of corn and soybeans from conventional
varieties. We present a simple economic model showing how introduction of labeling for genetically modified foods can
affect food markets, and the role that social preferences and attitudes in place at the time labeling is introduced can influence
the outcome of labeling policies. We examine how consumer attitudes toward food are established and how consumer
attitudes influence market structure. The implications of labeling for international trade in food products is also discussed.
