Saturday, March 19, 2016

GMO Labeling Bootleggers and Baptists

"Bootleggers and Baptists" is a term coined by Clemson economist Bruce Yandle to describe coordination among groups who might seem at first to have very different interests on a given issue. You can find more information in this video or this article.

In this view, the Baptists are the people or groups who explicitly call for a regulation to fix something they don't like. The Bootleggers are the ostensibly unintended beneficiaries of the regulation. Some examples are firms or groups who are "grandfathered in" under a less-strict standard or individuals in possession of a license that increases the costs of entry to potential competitors. Check out the video linked above for a couple of concrete examples.

With that as background, let's move to the case of GMO labeling.

The recent defeat of a bill in the Senate that would prohibit states from creating mandatory labeling requirements for firms gives us a real-world example of the Bootleggers and Baptists phenomenon in the ag sector. In this case, the Baptists are individuals and interest groups calling for GMO labeling requirements.

The bootleggers are companies like Campbell's who support labeling requirements likely knowing that it will increase costs for its competitors. Large firms like Campbell's can more easily bear the costs of regulation than their smaller competitors or potential entrants can. If they simply wanted to tell their customers that their products contained GMOs, they could have started doing so a long, long time ago.

The Bootleggers and Baptists framework can be used to understand the particular features of a lot of regulations. What examples can you think of?

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