ECONOMIC EFFECTS OF PURITY STANDARDS IN BIOTECH LABELING LAWS

This paper develops a model of heterogeneous consumer preferences to analyze the market and welfare effects of reduced purity standards for non-GM labeled food. Analytical results show that purity standards affect the equilibrium prices and quantities of both the GM and non-GM products as well as the welfare of the groups involved. A change in purity standards is shown to create winners and losers among the consumers as well as among the suppliers of the GM and conventional products.