Segregating genetically modified and nongenetically modified corn in a marketing channel

The adoption of GM corn in the United States depends on many factors including segregation costs, which have minor impacts on aggregate welfare. Because the demand for nonGM corn is small relative to its supply, no premium for nonGM corn can be generated in excess of the segregation costs. An outward shift in the supply of corn resulting from the adoption of GM varieties has a greater impact on aggregate welfare than do the segregation costs required to satisfy the GM-free demand. A 10% increase in the aggregate supply of GM corn increases aggregate welfare by more than US $250 million. However, nonadopters of GM corn lose while adopters can gain or lose depending on the nature of the aggregate demand curve for US corn.