The Formation of GM-free and GM Coasean clubs
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The unintended presence of traces of genetically modified (GM) crops in the harvests
of conventional crops plays a prominent role in the debate over the coexistence of GM
and conventional crops. One way to address the issue is the formation of GM-free or
GM-only clubs. We model the decisions of individual farmers to cultivate either GM
or conventional crops and combine this with a game theoretic model of club
formation to investigate the feasibility of clubs. We consider two liability regimes:
GM farmers are liable or they are not. We also consider two benchmarks: Nash
equilibrium without negotiations and the efficient configuration as well as partial
cooperation through Coasean clubs. We find that relatively large clubs can form but
they are not always necessary.