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International Review of Economics & Finance
Vol. 27, No. xx, 2013; Pages: 291–297


Genetic contamination of traditional products

E. Kwan Choi

Iowa State University, Ames, IA, USA.

Abstract

Cross-pollination can be caused by birds, insects and wind. Genetically modified (GM) seeds are produced each year in a controlled environment to maintain their purity. However, pollen from the GM crop can be transferred to traditional crops. When the GM crop producers are in long-run equilibrium and buy seeds from a monopolistic seed producer, the resulting market equilibrium is identical to that when a seed monopolist produces the GM crop directly. When involuntary genetic contamination occurs, the monopolist eventually loses its advantage and stops its protection of GM seeds. A terminator gene can stop genetic contamination but imposes spillover costs on the traditional producers and reduces their outputs.

Keywords:Genetic contamination; Terminator genes.


 
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