• The introduction of genetically modified (GM) crops has led to a plethora of policy issues based around consumer perceptions. In this paper, we present a general framework for analysing the economic impact of GM crops that incorporates supply benefits, market segmentation and the additional segregation costs imposed by market segmentation. We then give the results of five case studies of GM crops based on this general model. Consumers not sensitive to GM content and farmers in certain regions who can use GM seed to reduce costs benefit from the introduction of GM varieties, while consumers sensitive to GM content and producers in certain regions who cannot use GM seed to reduce costs are worse off.

Copyright © 2006 John Wiley & Sons, Ltd.