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Can Food Produced with New Plant Engineering TechniquesSucceed in the Marketplace?A Case Study of ApplesStéphan Marette, John Beghin, Anne-Célia Disdier, Eliza MojduszkaWorking Paper 21-WP 624September 2021Center for Agricultural and Rural DevelopmentIowa State UniversityAmes, Iowa 50011-1070www.card.iastate.eduStéphan Marette is CARD Faculty Collaborator and Visiting Professor, AgroParisTech, UMRÉconomie Publique, Thiverval-Grignon, France 78850. E-mail: [email protected] Beghin is CARD Faculty Fellow and Professor, Department of Agricultural Economics,University of Nebraska-Lincoln, Lincoln, NE 68583. E-mail: [email protected]élia Disdier is Professor, Paris School of Economics, INRAE, Paris, France 75014. Email:[email protected] Mojduszka is Economist, US Department of Agriculture Office of the Chief Economist,Washington, DC 20250. E-mail: [email protected] publication is available online on the CARD website: www.card.iastate.edu. Permission isgranted to reproduce this information with appropriate attribution to the author and the Center forAgricultural and Rural Development, Iowa State University, Ames, Iowa 50011-1070.For questions or comments about the contents of this paper, please contact Stéphan Marette,[email protected] State University does not discriminate on the basis of race, color, age, ethnicity, religion, national origin,pregnancy, sexual orientation, gender identity, genetic information, sex, marital status, disability, or status asa U.S. veteran. Inquiries regarding non-discrimination policies may be directed to Office of Equal Opportunity,3410 Beardshear Hall, 515 Morrill Road, Ames, Iowa 50011, Tel. (515) 294-7612, Hotline: (515) 294-1222, [email protected]

Can foods produced with new plant engineering techniquessucceed in the marketplace? A case study of applesUpdated September 8, 2021Stephan MaretteaJohn BeghinbAnne-Célia DisdiercEliza MojduszkadAbstract: New Plant Engineering Techniques (NPETs) have path-breaking potential to improvefoods by strengthening their production, increasing resistance to biotic and abiotic stresses, andby bettering their appearance and nutritional quality. Can NPETs-based foods succeed in themarketplace? Providing answers to this question, we first develop a simple economic model forR&D investment in food innovations based on NPETs and traditional hybridization methods, toidentify which technology emerges under various parameter characterizations and associatedeconomic welfare outcomes. The framework combines the cost of food innovation withconsumers’ willingness to pay (WTP) for the new food, highlighting the uncertain and costlynature of R&D processes as well as the role of consumer acceptance of technology, and the costof ignorance, and regret, if consumers are not fully informed on the technology used to generatethe new food. We then apply the framework to a case of NPETs-based new apples using recentlyelicited WTP of French and US consumers. Our simulation results suggest that NPETs may besocially beneficial under full information, and when the probability of success under NPETs issignificantly higher than under traditional hybridization. Otherwise, the innovation based ontraditional hybridization is socially optimal. A probable collapse of conventional apples raisesthe social desirability of new apples generated by NPETs and traditional hybridization.Keywords: new plant engineering techniques (NPETs); gene editing (GE); consumerinformation; willingness to pay; food innovation; industrial organization; appleJEL Codes: C91, D12, Q18, Q16Corresponding author: Université Paris-Saclay, INRAE-AgroParisTech, UMR EconomiePublique, Avenue Lucien Brétignières, 78850 Thiverval-Grignon. France; Email:[email protected] b Yeutter Institute of International Trade and Finance and Departmentof Agricultural Economics, University of Nebraska Lincoln, Lincoln NE 68583, USA. Email:[email protected] c Paris School of Economics-INRAE, 48 boulevard Jourdan, 75014 Paris,France. Email: [email protected] d US Department of Agriculture Office of theChief Economist. Washington DC. Email: [email protected] The authorsacknowledge financial support through a cooperative agreement from the Office of the ChiefEconomist at USDA, the projects DIETPLUS ANR17-CE21-0003 and ANR-17-EURE-0001funded by the French National Research Agency (ANR) and the M. Yanney Chair at UNL.Without implicating them, we thank two anonymous referee and Editor Mindy Mallory forcomments on an earlier version, and Shawn Arita, Anastasia Bodnar, Michael Coe, Fan-Li Chou,Karina Gallardo, Sharon Sydow, and Chengyan Yue for discussions. The findings andconclusions in this paper are those of the authors and should not be construed to represent anyofficial USDA or U.S. Government determination or policy.1

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1. IntroductionNew Plant Engineering Techniques (NPETs), such as gene editing (GE), are a group of recentbiotechnologies allowing to accurately target deoxyribonucleic acid (DNA) manipulation ofvarious organisms at a relatively low cost by silencing, suppressing, adding, or altering geneticmaterial without introducing foreign genes. 1 Various applications of those techniques alreadyexist and many others are actively explored for their promising potential in human and animalmedicine, as well as in agriculture (Erpen-Dalla Corte et al., 2019; Herrero et al. 2020; NAS,2016; Ormond et al., 2017; Qaim, 2020; and Zhao et al. 2019). For example, in horticulture, GEand other NPETs could be path-breaking to alter fruits and vegetables by improving the strengthof their production, by increasing their resistance to biotic stresses, and by favoring theirappearance and/or their nutritional quality (e.g. improved starch content in potatoes or higherlycopene content in tomatoes, Erpen-Dalla Corte et al., 2019). For arable crops like cereals orlegumes, NPETs are useful for strengthening plants’ characteristics to endure prolongeddroughts or bypassing pesticides resistance, and acute problems likely to cripple yields andultimately supply security (Osakabe et al., 2016; Ricroch et al., 2017; and Zafar et al., 2020).Animal applications are addressed in Zhao et al. (2019).This potential revolution in agricultural and food production innovation may be facingmajor headwind, especially in many European countries where a significant proportion ofconsumers are reluctant to purchase “anything produced with biotechnologies.” 2 Under thisconsiderable uncertainty in the marketplace, several questions are paramount and requireanswers. Will consumers and policymakers discount NPETs-based novel foods and compromisetheir market emergence, as it has happened for many GMOs? There is emerging evidence thatNPETs also include other techniques such as RNA interference (RNAi) used to silence or suppress specific genefunction in plants in a targeted way. These techniques do not rely on the traditional gene splicing of olderGenetically Modified Organisms (GMOs). The framework applies to most NPETs although we focus on geneediting in the application.2Policymakers and regulatory delays could also be a major impediment in many countries, especially those inwhich GMOs faced very stringent and slow regulatory approvals and countries treating NPETs as traditionalGMOs, such as in the European Union (Purnhagen and Wesseler, 2020).13

consumers, especially in European countries (e.g., France), have concerns for and thereforediscount NPETs-based foods, but to a lesser extent than for GMOs (Beghin and Gustafson, 2021).What are the consequences for R&D investments relying on GE, or other NPETs, and producerstrategies in terms of innovations’ adoption, as well as the potential social benefits resulting fromthese innovations? Will such innovations be facilitated by increasing problems with manydiseases and pests, such as the Fusarium fungus affecting Cavendish bananas (Crop BiotechUpdate, 2021), and the ringspot virus, which has whipped out traditional papayas in Hawaii(Gonsalves et al., 2007)? The papaya case represents a tangible case of the collapse of aconventional crop leading to greater consumer acceptance of GMO-based food innovation (theresistant papaya). Environmental issues such as climate change or water scarcity could alsofacilitate these innovations.Our paper provides a framework to answer the above questions and contributes to thecurrent debate on new biotechnologies by studying the link between consumers’ preferences andfirms’ incentives for R&D of new foods through GE and other NPETs, or through conventionalhybridization methods and their emergence on markets. This is the conceptual contribution ofthe paper. We analyze the social value of food innovations utilizing a simple IndustrialOrganization (IO) model that combines the cost of food innovations (with different technologies,NPETs or traditional hybridization) with consumers’ willingness to pay (WTP) for thoseinnovations. Our analysis relies on three main components. First, the WTP is conditioned on thelevel of acceptance or rejection of the technology used to innovate. The framework highlightsthe role of consumer acceptance of technology and their information levels regarding thetechnology underlying the novel food. Consumer acceptance or reluctance implies a potentialcost of ignorance and regret if consumers are not informed on the technology embodied in thenew food before they buy it. Second, the model accounts for the uncertain and costly nature ofR&D processes for traditional hybridization and NPETs. The model allows identifying eachpreferred technology (NPETs or traditional hybridization) that emerges under varying4

assumptions and their respective economic welfare outcomes. Third, the framework is alsosuitable for analyzing a collapse scenario in which the existing conventional food item (thedefault option for consumers) disappears and must be replaced by the new food. Consumers canno longer revert to the conventional food, making the new food the unique choice available toconsumers. Welfare implications of such a collapse scenario are evaluated.We follow with an application of the model to a case study of a hypothetical developmentand introduction of new apple varieties into the market. The application builds upon the resultsof two experimental surveys of consumers’ preferences in France and the US for novel apples,relative to conventional apples (Marette et al., 2021).Our paper provides several contributions to the literature evaluating WTP for novel foodsbased on NPETs techniques and their emergence. First, recent studies identify significantdiscounting of GE and other NPETs foods by consumers compared to conventional foods, whichis reminiscent of past reluctance to GMO food (Bunge and Dockser Markus, 2018; Caputo et al.,2020; De Marchi et al., 2019 and 2020; Edenbrandt et al., 2018; Hudson et al., 2015; Lin et al.,2019; Marette et al., 2021; Muringai et al., 2019; Shew et al., 2018; and Yunes et al., 2019; andBeghin and Gustasfon, 2021 for a survey). See Bredahl, 1999; and Lusk, 2011 for earlier studieson attitudes towards GMOs. We go one-step further by providing a conceptual framework toanalyse the social desirability, thus value, of NPETs-based food innovations and their potentialemergence and success in the marketplace based on consumer valuation and cost of R&D.Second, the application to apples leverages the recently elicited WTPs into the proposedframework. A welfare analysis uses the WTPs to calibrate the model of food innovations undercompeting technologies (traditional hybridization, GE as representative of NPETs). Theapproach accounts for the fixed cost of R&D and the probability of innovation success underboth technologies. The proposed framework is applicable to other food novelties that couldemerge with similar technologies or other disruptive technologies contributing to a sustainablefood supply (see Herrero et al., 2020, for a list of these technologies).5

Third, we analyse the situation of a potential agronomic collapse of conventional foods toevaluate if the emergence of NPETs-based foods can be facilitated under this extreme casescenario. We draw some ex ante policy implications, thus before any actual realized outcomes.This inclusion of probabilities of innovation and a collapse case scenario is new and differs fromprevious contributions to the literature on experimental methods (Lusk et al., 2005a; Lusk andMarette, 2010; Rousu et al., 2007; and Rousu et al., 2014). In all those papers, the introductionof new goods is certain and the innovation “predictable” and effectively existing, while our paperintroduces R&D uncertainty and sunk costs into the analysis.The remainder of the paper is organized as follows. Section 2 discusses new genetictechnologies for food innovations in agriculture, as a potential solution for addressing risksrelated to complete collapses (or disappearance) of conventional food crops. Section 3 presentsthe analytical strategy based on a simple IO model of R&D investment combined with theconsumer demand for the new food varieties and consumer surpluses leading to the welfareanalysis. Section 4 presents the application of the model to apples and summarizes thehypothetical experiments’ results used to derive the consumer demands and welfare valuations.The main results of the application follow and the extension to the collapse of conventionalapples is also studied. In the conclusions, we discuss potential extensions of our researchapproach and some implications for regulatory policies.2. NPETs technologies for foodIn this paper, we focus on the case of quality enhancement of food brought about by NPETs andrely on a hypothetical case of improved apples. The innovation relies on editing the geneticsequence of the apple to neutralize or delete the gene responsible for browning. More specifically,6

we refer to the CRISPR-Cas9 technique, 3 which has become an engineering tool that makes iteasier and more precise to modify DNA sequences. This process clearly differs from traditionalGMOs since no external gene is introduced in the new good.Beyond the hypothetical cases, the actual commercialization of new fruits and vegetablesbased on GE or other NPETs is limited. Non-browning mushrooms obtained with GE and nonbrowning potatoes obtained with RNAis have been patented but not yet commercialized(Jalaluddin, et al., 2019). Currently only the Arctic apple and the Simplot Innate potatoes aresold in Canada and the US on a limited basis and with caution. 4Innovations and varietal improvements in agriculture are slow and costly processes. Forexample, it takes around 20 years of R&D for getting a new apple variety. Besides, consumersmay react negatively to innovations (Glenna et al., 2007). Consequently, producers and privateinnovators often prefer newly augmented traditional methods, such as the Marker AssistedSelection (MAS) that combines genetic knowledge and classical hybridization into so-calledselective breeding, even if such techniques remain quite expensive (Wannemuehler et al., 2019).GE and other NPETs innovations in food are mainly driven by public research institutes or bymarketing orders with checkoff program funding agricultural research, or with publicinvolvement like the one led by Washington State University for designing new apples. Thosepublic organizations of R&D potentially mitigate the reluctance of innovators and producers bymaintaining conditions under which new goods could emerge. This is important because of crops’agronomic fragility, pesticide resistance and outbreaks, and even collapse of the conventionalvariety of the good. Biotechnology appears as potential solution for preventing these risks (CropBiotech Update, 2021; Le Page, 2019; and NAS, 2016). Examples of major outbreaks includeCRISPR stands for Clustered Regularly Interspaced Short Palindromic Repeats. The Nobel Prize in Chemistry2020 was awarded jointly to E. Charpentier and J.A. Doudna for the development of this new and promisingmethod for genome editing.4In 2019, production of Arctic apples reached 4000 short tons for the U.S. market (mostly for expanded sales infood-service). In 2020, production increased to 6500 tons. In retail, there were three sizes of bags with pre-cutapples (10oz, 5oz, and 2oz) available for sale and two varieties (Arctic Golden and Arctic Granny).37

cocoa with the swollen-shoot virus, tomatoes with the brown rugose virus, and bananas with theFusarium fungal disease (Tropical Race 4). Regarding papayas, a GMO variety was introducedover twenty years ago and saved the entire Hawaiian industry from the ringspot virus (Gonsalveset al., 2007). Now the GMO papaya is ubiquitous and fully accepted by consumers in Hawaii.The papaya case motivates the analysis of a collapse scenario.NPETs can appear as an important revolution in the field of fruit and vegetables forimproving the strength of their production and/or the quality of goods including the context ofpossible collapse. However, public investment in R&D should also account for the potentialreluctance of many consumers for new goods created with GE and other NPETs – as in the pastfor GMOs. Consumers’ acceptance influencing private and social profits could be estimated exante via experiments, namely before the actual introduction of a food on a market.3. Method3.1. Analytical strategyWe develop a simplified model incorporating IO considerations and consumers’ valuation ofnovel foods. Our model accounts for the probability of having new goods resulting from R&Dinvestments. This is consistent with a benevolent regulator deciding how to invest in R&D. Theproposed model allows for a simplified estimation of potential market effects with one or twogoods, which is a proxy for market adjustments with many imperfect substitutes. For simplicity,we consider decisions based on welfare measures focusing on surpluses of consumers and publicinvestment decisions in R&D to maximize consumer welfare. Extensions to the basic model areproposed in the subsections 4.5 and 4.6 and in Appendix C.Consumer valuation is based on two experimental surveys of consumers’ preferences inFrance and the US for novel apples. They used hypothetical and fictitious choices in a lab anddifferent technology messages (on traditional hybridization and GE as representative case of8

NPETs), to estimate the WTP 5 of 162 French and 166 US consumers for new apples, which donot brown upon being sliced or cut. 6 Messages centered on the social and private benefits ofhaving the new apples relative to conventional ones.In those surveys, consumers in France and the US exhibit similar preferences with respectto biotechnology. Many, but not all consumers, in both countries discount the apple improvementobtained through GE techniques, relative to traditional hybridization-based innovation. However,there is a significant group of consumers knowingly accepting the new GE apple. This group ofaccepting consumers is relatively larger in the US than in France, strongly suggesting that theacceptance of GE foods is possible in a significant segment of the population (at least in somecountries).Based on the consumers’ WTP values in the two countries, we derive the demand for thenew apples and associated consumer surplus. Then we derive ex ante (i.e., before the actualintroduction of the new variety of the good) estimates for the welfare impacts of GE apples ontothe market, by taking into account both R&D cost of innovation and probability of innovationsuccess. Our simulations suggest that GE may be socially beneficial if full information on thetechnology is provided to consumers and if the probability of success under GE is significantlyhigher than under the traditional hybridization. In the case of partial or no information,consumers discounting the GE apples would buy them unknowingly, experiencing regret lossesrelative to their true valuation of the GE apples. Thus, in this context, traditional hybridizationremains the socially optimal innovation technique.3.2 An IO model integrating experimental resultsEven if hypothetical WTP are likely to be upward biased, some contributions downplay risks of biases formarginal WTP related to a quality characteristic or the impact of additional information. By comparinghypothetical and non-hypothetical responses, Lusk and Schroeder (2004) showed that marginal WTP for a changein quality/characteristic is, in general, not statistically different across hypothetical and real (consequential)payment settings.6The fictitious situation is inspired by the Artic apple, which uses RNAi rather than GE to suppress the generesponsible for browning and bruising in apples. Arctic apples have been approved in the US and Canada. Theyare sold through food service as well as very limited number of retail establishments in some US states.59

3.2.1 A three-stage gameThe market equilibrium is determined as a three-stage game summarized in Figure 1. Theequilibrium is solved by backward induction (i.e., subgame Nash equilibrium). Assumptions ofthe game are detailed in Figure 1.In Stage 1, the benevolent regulator in charge of innovation decides whether to choose onetype of innovation, namely hybrid or NPETs, denoted by N {HY, NPETs}. If the innovation isselected, the economy incurs a sunk expenditure FN, associated with the R&D investment,leading to a probability 𝜆𝜆𝑁𝑁 of getting the new good as revealed in Stage 2. The innovation doesnot emerge with a probability (1 𝜆𝜆𝑁𝑁 ).Figure 1. Stages of the IO modelTraditional hybridization is characterized by FHY and 𝜆𝜆𝐻𝐻𝐻𝐻 , and NPETs is characterized by FNPETsand 𝜆𝜆𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 . It is assumed that FNPETs FHY and 𝜆𝜆𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝜆𝜆𝐻𝐻𝐻𝐻 , which means that sunk costs andprobabilities of innovation are positively correlated. 7 Sunk costs are incurred when investmentsare made in the first stage and cannot be recovered (Sutton, 1991). To select the innovation, theFew empirical cases suggest an opposite relationship for the cost, with FNPETs FHY and 𝜆𝜆𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁 𝜆𝜆𝐻𝐻𝐻𝐻 . Thisconfiguration is not studied in this paper, but it is likely to lead to the welfare dominance of the NPETs ifconsumers are not too averse to this new technology.710

regulator considers expected welfare defined simply by the sum of consumers’ surpluses minusthe sunk costs of R&D. 8In Stage 2, the outcome of the innovation investment previously decided in Stage 1becomes known. If the innovation is successful, with a probability of success 𝜆𝜆𝑁𝑁 , new goods(hybrid or NPETS) are offered on the market. Conversely, if the innovation fails, with aprobability (1 𝜆𝜆𝑁𝑁 ), only the conventional goods are sold on the market.In Stage 3, the exchanges occur. Consumers know the characteristics of the sold good(s),except for the information about the type of innovation. Two cases are considered. First,consumers are fully informed about the underlying technology. Second, they are not or onlypartially informed on the technology and face costs of ignorance and regret. Market prices ofgoods are exogenously given for simplicity.We now turn to equilibria at different stages, by starting, according to the backwardinduction principle, with Stage 3 and the way consumers’ demand is determined.3.2.2. Stage 3: Demands and surpluses under different configurationsConsumers’ demands depend on the estimations of their surpluses that relate to their WTP. Toconvert consumers’ WTP into demand curves, we assume that each consumer purchases oneunit, providing the largest surplus approximated by the difference between WTP and the marketprice (Roosen and Marette, 2011; Rousu et al., 2014). Choices can be real or inferred, andhypothetical, depending on the type of survey and goods being considered. 9For the estimation of purchases in Stage 3, the available goods sold on the market are givenConsumer surplus includes consumers’ valuation of some environmental dimensions, like the issues related tofood wasting or perennial crop diversity. This may not completely internalize externalities since other agentscould still be harmed by external effects. These external effects could be addressed using a per-unit costmultiplied by the size of the externality per unit consumed. For example, food waste reduction could beaccommodated by a reduction of a “rectangle” (food waste per unit x environmental cost per unit). The socialplanner-regulator would internalize this additional element in its calculus. Profits in the supply chain areaddressed in the extension section.9The consumers’ surplus with the integration of the possible cost of ignorance regarding the innovation process isfully compatible with the value of information defined under welfare theory (Foster and Just, 1989; Teisl et al.,2001).811

and depend on the innovation investment made in Stage 1 and its realization in Stage 2.Consumers individually choose either, to purchase or not to purchase one unit of the goods,without mixing the two types of goods if both conventional and new goods are offered. The unitof the conventional good is sold at a price P (observed or relevant at the time of theexperiment/survey) and the new good is assumed to be sold at the same price PN P, forsimplicity. The WTP for the new good is denoted by 𝑊𝑊𝑊𝑊𝑊𝑊𝑁𝑁𝑚𝑚𝑘𝑘 and the WTP for the conventionalgood is denoted 𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑚𝑚𝑘𝑘 for an informational message m on the technology and a consumer k.Informational messages m cover the technologies {HY, NPETs} and the case of no informationprovided on the technology.Without innovation investment in Stage 1, or if the innovation fails to provide the newgoods in Stage 2, the consumer k (with k 1, ,K) can choose between two outcomes in Stage 3:conventional good and none, with a utility normalized to zero. This case corresponds to thereference baseline of any experiment. Consumer k chooses a single unit of the conventional good,when this good brings a positive surplus, given by the difference between the WTP and themarket price (and no good otherwise). Thus, the consumer surplus (SC) leading to the purchasingdecision of a good is given by𝑆𝑆𝑆𝑆𝐶𝐶0𝑘𝑘 𝑀𝑀𝑀𝑀𝑀𝑀 𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶0𝑘𝑘 𝑃𝑃, 0 .(1)There is no information to be revealed since no new technology appeared.With innovation investment in Stage 1, and if this innovation is successful in Stage 2, theconsumer can choose between three outcomes in Stage 3: new good, conventional good andnone. For a message m on the novelty component, consumer k chooses the purchasing alternativethat generates the highest utility; her surplus becomes𝑀𝑀𝑀𝑀𝑀𝑀 𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑚𝑚𝑘𝑘 𝑃𝑃, 𝑊𝑊𝑊𝑊𝑊𝑊𝑁𝑁𝑚𝑚𝑘𝑘 𝑃𝑃, 0 .(2)The new good is selected if 𝑊𝑊𝑊𝑊𝑊𝑊𝑁𝑁𝑚𝑚𝑘𝑘 𝑃𝑃 𝑀𝑀𝑀𝑀𝑀𝑀 𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑚𝑚𝑘𝑘 𝑃𝑃, 0 , and not selected otherwise, for12

turning to the other options depending on the comparison between 0 and 𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑚𝑚𝑘𝑘 𝑃𝑃.Two subcases can be considered here: i) with full information about the innovationtechnology and ii) without (or just partial) information about the technology. Under the firstconfiguration, the consumer is fully informed on the innovation process and there is no ignorancecost or regret effect. Thus, the surplus for consumer k is described by equation (2) with avaluation for each technology (HY and NPETs) and with their respective “full-information”messages. Directly from equation (2), we derive consumer surplus under the full informationmessage (denoted by the superscript m 𝑓𝑆𝑆𝑆𝑆𝐻𝐻𝐻𝐻𝑘𝑘 𝑀𝑀𝑀𝑀𝑀𝑀 𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑘𝑘 𝑃𝑃, 𝑊𝑊𝑊𝑊𝑊𝑊𝐻𝐻𝐻𝐻𝑘𝑘 𝑃𝑃, 0 𝑁𝑘𝑘 𝑀𝑀𝑀𝑀𝑀𝑀 𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑘𝑘 𝑃𝑃, 𝑁𝑁𝑁𝑘𝑘 𝑃𝑃, 0 .(3a)(3b)The second configuration with no (or only partial) information about the type ofinnovation technology (and denoted by the superscript m ni) leads to a decision based onequation (2) that subsequently the consumer could regret once that full information is revealedon the technology. Some consumers would make different decisions with the full informationprovided ex ante. 10 Therefore, the costly ignorance effect linked to the lack of full technologyinformation needs to be accounted for by a benevolent regulator in the computation of the“complete” surplus. For a consumer purchasing a specific good, the effect of ignorance is givenby the WTP for the good with full information minus the WTP related to the purchase. Thisallows to measure the difference between the “ideal” choice under full information and the“actual” choice without (or partial) information.If goods sold are generated by hybrid methods, the effect (or cost) of ignorance is 𝑛by 𝐽𝐽𝐶𝐶𝑘𝑘 𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑘𝑘 𝑘 𝐽𝐽𝐻𝐻𝐻𝐻𝑘𝑘 𝑊𝑊𝑊𝑊𝑊𝑊𝐻𝐻𝐻𝐻𝑘𝑘 𝑊𝑊𝑊𝑊𝑊𝑊𝐻𝐻𝐻𝐻 , where 𝐽𝐽𝐶𝐶𝑘𝑘 (respectively 𝐽𝐽𝐻𝐻𝐻𝐻𝑘𝑘 ) is an𝑘𝑘10With the revelation of information about traditional hybridization or NPETs, consumers who were not initiallypurchasing a good could start buying it or start buying the alternative good or stop buying any good, and viceversa.13

indicator variable, taking the value of 1 if consumer k is predicted to have chosen theconventional (respectively new hybrid) good in the absence of information. It means that, if aproduct is predicted to be purchased without information, this effect of ignorance is measuredby the difference between the WTP under full information and the WTP without (or partial)information. The effect of ignorance corrects the surplus (2) with m ni, by integrating “adistance” to the full information context, meaning that the consumer ex-post could regret thepurchase done without information. In other words, if she had full information, she might havebought a different basket. 11 The complete consumer surplus, considered by the decision maker,and integrating the effect of ignorance, is equal to𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛 𝑀𝑀𝑀𝑀𝑀𝑀 𝑘 𝑃𝑃, 𝑊𝑊𝑊𝑊𝑊𝑊𝐻𝐻𝐻𝐻 𝑃𝑃, 0 𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑛𝑛𝑛𝑛 𝐽𝐽𝐶𝐶𝑘𝑘 𝑊𝑊𝑊𝑊𝑊𝑊𝐶𝐶𝑘𝑘 𝑘 𝐽𝐽𝐻𝐻𝐻𝐻𝑘𝑘 𝑊𝑊𝑊𝑊𝑊𝑊𝐻𝐻𝐻𝐻𝑘𝑘 𝑊𝑊𝑊𝑊𝑊𝑊𝐻𝐻𝐻𝐻 ,𝑘𝑘(4)If goods sold are NPETs-generated goods, the effect (or cost) of ignorance is defined by𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑛𝑛𝑛𝑛 ,𝐽𝐽𝐶

[email protected] 1 Can foods produced with new plant engineering techniques succeed in the marketplace? A case study of apples . Updated September 8, 2021 . Stephan Marettea . John Beghinb . Anne-Célia Disdierc . Eliza Mojduszka. d. Abstract: New Plant Engineering Techniques (NPETs) have path- breaking potential to improve