The path of coexistence: from the regulation of transgenic crops to the establishment of differentiated markets

Abstract

The purpose of this paper is to discuss some issues about the key role of regulation in the transgenic products and the influence on the formation of differentiated markets, and also the emergence of a market decommoditization. Discusses the challenges imposed by construction of regulatory institutions in Biosafety, based on the directives of the Cartagena Protocol on Biosafety (CPB), for the current and future development of transgenic crops and the role of the government as a regulator/incentive agent. In order to this, the theoretical approach is given by New Institutional Economics (NIE) and New Economic Sociology (NES). The differentiated markets analyzed from the NIE, presented as new property rights as the process of decommoditization moves forward and promotes the creation of new attributes to the products. Thus, a new governance form is needed to reduce the transaction costs that results from the process. The Government has an important role to promote more appropriate forms of arrangement and create clear rules for certifying and labeling. The NES main contribution for differentiated products moves forward the informal relations between agents based on reputation or through social networks, create opportunities for the implementation of bilateral agreements for commercialization. Thus, this configuration does not impose high costs through the chain based on Identity Preservation Systems.