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International Trade in Genetically Modified Products |
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E. Kwan Choi |
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Working Paper |
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E. Kwan Choi |
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This paper investigates competition between two markets that sell
close substitutes: a traditional product and a genetically modified (GM)
product. Tightening an import quota on the GM product raises the prices of
both goods and hurts consumers. Two scenarios are considered under free
trade: Cournot-Nash equilibrium and Stackelberg equilibrium. A Stackelberg
type monopolist produces more, and the competitive traditional firms produce
less, than in Cournot-Nash equilibrium. In the long
run, an import ban on the GM product does not help competitive producers of
the genetically modified organism (GMO)-free products but benefits only the
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