Genetic contamination of traditional products

Article history: Received 30 May 2011 Received in revised form 18 October 2012 Accepted 22 October 2012 Available online xxxx Cross-pollination can be caused by birds, insects and wind. Genetically modified (GM) seeds are produced each year in a controlled environment to maintain their purity. However, pollen from the GM crop can be transferred to traditional crops. When the GM crop producers are in long-run equilibrium and buy seeds from a monopolistic seed producer, the resulting market equilibrium is identical to that when a seed monopolist produces the GM crop directly. When involuntary genetic contamination occurs, the monopolist eventually loses its advantage and stops its protection of GM seeds. A terminator gene can stop genetic contamination but imposes spillover costs on the traditional producers and reduces their outputs. © 2012 Elsevier Inc. All rights reserved.