Abstract
Since their commercial introduction in 1996, genetically modified (GM)
crops have been quickly adopted world wide, but some GM crops/varieties have not
received regulatory approval for use in some importing countries, leading to
asynchronicity in regulatory approvals. In this context, the international agricultural
trade relied on analytical GMO testing which is a statistical process, along with identity
preserved systems to segregate GM and non-GM crops. This led to a situation where
measurement uncertainty became an important issue as it can lead to potential holdups at
the point of import. In this background, this paper examines the implications of
measurement uncertainty associated with GMO testing on the behavior of importers and
exporters in a game theoretic framework. The results indicate that relative size of
identity preservation costs, testing and rejection costs, the premiums offered in the non-
GM markets and measurement uncertainty all have direct impacts on the behavior of
importers and exporters.