Resource information
A common-agency lobbying model is
developed to help understand why North America and the
European Union have adopted such different policies toward
genetically modified (GM) food. Results show that when
firms (in this case farmers) lobby policy makers to
influence standards and consumers and environmentalists care
about the choice of standard, it is possible that increased
competition from abroad can lead to strategic incentives to
raise standards, not just lower them as shown in earlier
models. We show that differences in comparative advantage in
the adoption of GM crops may be sufficient to explain the
trans-Atlantic difference in GM policies. On the one hand,
farmers in a country with a comparative advantage in GM
technology can gain a strategic cost advantage by lobbying
for lax controls on GM production and usage at home and
abroad. On the other hand, when faced with greater
competition, the optimal response of farmers in countries
with a comparative disadvantage in GM adoption may be to
lobby for more-stringent GM standards. Thus it is rational
for producers in the EU (whose relatively small farms would
enjoy less gains from the new biotechnology than broad-acre
American farms) to reject GM technologies if that enables
them and/or consumer and environmental lobbyists to argue
for restraints on imports from GM-adopting countries. This
theoretical proposition is supported by numerical results
from a global general equilibrium model of GM adoption in
America without and with an EU moratorium.
