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.
Golan, E., Kcuhler, F. and S.R. Crutchfield. Labeling Genetically Modified Foods: An Economic Appraisal. In: Microbehavior and Macroresults: Proceedings of the Tenth Biennial Conference of the International Institute of Fisheries Economics and Trade, July 10-14, 2000, Corvallis, Oregon, USA. Compiled by Richard S. Johnston and Ann L. Shriver. International Institute of Fisheries Economics and Trade (IIFET), Corvallis, 2001.