Strategic response to GMOs by GM-free countries

This article examines the dilemma of a large exporting country of an agricultural product that has to determine whether or not to approve genetically modified ( GM) products with or without a labelling regime. We derive two main results. First, the approval decision on GM products is specific to the labelling regime: approval of GM products is optimal under a labelling regime, whereas non-approval is optimal in the absence of a mandatory labelling requirement. Second, the inability to protect the innovator's rent through IPR enforcement can prevent the approval of GM products.