foods might be benefited from the labeling policy. If consumers are willing to bear the premium
for non-GM foods, producers do not need to fully absorb the cost of segmenting the market.
From the government standpoint, labeling of GM foods might cause a warfare loss to the society
in the long run if the market is not competitive for both GM and non-GM food products.
Consumers would pay a higher price in order to avoid GM foods and the market does not reach
to the optimal equilibrium for product prices. The warfare loss in the long term might discourage
the government to enforce a mandatory labeling policy regarding GM foods. Therefore, it is
crucial to educate the general public about the characteristics of GM foods so that the risk
perception associated from consuming such foods can be mitigated.
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