Biodiversity and optimal policies towards R&D and the growth of genetically modified crops

In this paper wil provide a simple model illustrating the possible nature of government policy with regards to genetic modification, taking into account its impact on the environment. We show that it is necessary not only to intervene in the growing of crops, but also to intervene in R&D through a tax on the adoption of new GM technology. Without intervention at both levels, both the cultivation of GM crops and the rate innovation in GM will exceed their socially optimal levels.