The bene®ts of GMOs dominate both scienti®c and social discussion of them. Their bene®ts are also a principal aspect of their economics as re¯ected in this afternoon's papers. Evaluating the economic bene®ts of GMOs forces appraisal of how economists measure the bene®ts of new technologies, and I want to focus on this issue. Pray et al. (2001) note that [t]o assess the division of bene®ts between farmers and suppliers of biotechnology' they could assume a parallel shift in the cotton supply curve F F F due to a reduction in cost of production in ®elds where farmers grow Bt cotton' (cf. their Figure 1). The supply curve shifter was estimated using costs and returns data of farmers who did and did not use Bt cotton'. By contrast, Frisvold et al. (1999) were interested in estimating the size and distribution of gains from genetic improvements in US crops at an aggregate level, and they estimated that 60 per cent of gains were appropriated by the US. Their analysis involved introducing yield gains as supply shocks into the F F F USDA F F F SWOPSIM model of world agricultural trade' (Frisvold et al., 1999, p. 227). Because yield shifters are a standard model of estimating the supply shifter in technological change (cf. Akino and Hayami, 1975) it is worth pursuing the logic.
The core of the Frisvold et al. logic is represented in Figure 1. Without GMOs, US supply is S1, world excess supply is ES1, and world excess demand is ED1. Ignoring transport costs etc., world and US equilibrium price is p1. With GMOs ± and assuming for simplicity that only the US has access to them ± US supply is S2, world excess supply is ES2, and world price falls to p2. The extent of the US supply curve shift is estimated via yield gains. Ignoring US consumer gains from lower international prices, US producers gain (p2cd ± p1ab) from the new GMO technology. Producers (consumers) in the rest of the world lose (gain) from the lower world prices. This is the traditional partial equilibrium model of representing technological change, and estimating the magnitude and distribution of its bene®ts.
But re¯ect on the assumptions of this model. Apart from the usual perfect competition underpinnings, the disembodied form of technological change has been assumed without effective property rights. However, GMOs are an embodied technology and, thanks to a