technische universität münchen spatial aspects of the formation of gmo-free or gmo clubs maarten...
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Technische Universität München
Spatial aspects of the formation of GMO-free or GMO clubs
Maarten J. Punt
Technische Universität München
Technische Universität München
Introduction
• Ruling of the ECJ: Pollen is an ingredient of honey (September 2011)
• Ruling fueled the coexistence debate
• ECJ does not settle liability
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© M. M. Karim
Technische Universität München
Coexistence
• Several ways of dealing with coexistence
• Ex ante:– Spatial segregation (e.g. isolation distance, buffer zone)– Temporal segregation (e.g. sowing, harvest)– Information requirements
• Ex post:– Liability (essentialy property rights)
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Prevention of liability issues through adventitious presence
• Possible measure: form GMO-free or GMO-only regions
• If GMO farmers are liable ->
GMO-only regions
• If GMO farmers are not liable ->
GMO-free regions
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Paper setup
• Do farmers have incentives to form GMO-free or GMO-only regions given liability and adventitious presence?
• Club formation– Incentives to join the club– Incentives to leave the club– Stable club: no-one has an incentive to join or leave the formed
club
• Open membership: anyone can join or leave
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Spatial set-up
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GMO 1
GMO 2
Conventional 3
Conventional 4
GMO 5
α13
α53
α24
α23
α14
α54
Probability of affecting a conventional farmer = αij
Probability of no adventitious presence in
conventional fields =
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Further assumptions
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• There is a price premium for conventional crops
• There is a cost advantage for GM crops
• Each farmer owns a single field
• A single club can form with open membership– GMO free or GMO only type depends on liability regime– Minimum number of “original type” = 2
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Farmer’s decision: GMO farmers not liable
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• Expected payoff of conventional crops:
• Payoff of GM crops:
• Choose conventional crops if and GM crops otherwise
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Club formation
• Form club and pool profits• Compensate GMO farmers to farm conventional
• Internal stability: No farmer wants to leave the club• External stability: No farmer wants to join the club
• Stability depends on the sharing rule.
• Potential internal stability: the club profits exceed the outside option payoffs
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Payoffs with club
• If a club with S members forms the profits of the club are:
• All conventional farmers outside the club receive:
• Note that • All GM farmers outside the club receive
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Potential Internal Stability
• Outside option payoff of a conventional farmer: • Outside option payoff of a GM farmer
• The payoff to a conventional farmer is always less in the club then outside the club!
• Exception: if two conventional farmers are left• GM farmers are willing to join the club as long as
enough compensation is paid
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Farmer’s decision: GMO farmers liable
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• Payoff of conventional crops:
• Expected payoff of GM crops:
• Choose conventional crops if and GM crops otherwise
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Payoffs with club• If a club with T members forms the profits of the club are:
• All conventional farmers outside the club receive:
• All GM farmers outside the club receive:
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Potential Internal Stability
• Outside option payoff of a conventional farmer:
• Outside option payoff of a GM farmer • The payoff to a GM farmer is always less in the club
then outside the club!• Exception: if two GM farmers are left• Conventional farmers are willing to join the club as long
as enough compensation is paid
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Some simulations
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C 1
C 2
C 3
GM 4
GM 5
GM 6
Parameter Set 1 Set 2
pC 100 (€/tonne) 200 (€/tonne)
pG 50 (€/tonne) 150 (€/tonne)
c1,2,3 20 (€/tonne) 10 (€/tonne)
c4,5,6 40 (€/tonne) 150 (€/tonne)
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Stable conventional clubs (set 1)
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C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
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Stable GM clubs (set 2)
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C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
C 1
C 2
C 3
GM 1
GM 2
GM 3
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Summary & Conclusions
• Investigate feasibility of GM-free or GM-only clubs– Open membership– Cartel stability model of club formation– Different liability regimes
• The maximum number of club initiators is 2• Conventional clubs are easier to form
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