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A Game Theoretic Approach To Organic Foods: An Analysis Of Asymmetric Information And Policy

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Author Info
McCluskey, Jill J.

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Abstract

Demand for healthy, safe and environmentally friendly food products has been increasing. In response, producers are marketing organic and other quality-differentiated foods, sometimes claiming to have followed sound environmental and animal welfare practices. These products frequently have unobservable quality attributes. If the profit-maximizing producer is able to deceive the consumer with a false claim, then he or she will enjoy a higher price with lower production costs (compared to the full disclosure outcomes). The analysis described in this paper shows that repeat-purchase relationships and third party monitoring are required for high-quality credence goods to be available. Policy implications of this analysis for national organic food standards are discussed.

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Publisher Info
Article provided by Northeastern Agricultural and Resource Economics Association in its journal Agricultural and Resource Economics Review.

Volume (Year): 29 (2000)
Issue (Month): 1 (April)
Pages:
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Handle: RePEc:ags:arerjl:31334

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Keywords: Demand and Price Analysis;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law & Economics, University of Chicago Press, vol. 24(3), pages 461-83, December.
  2. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law & Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
  3. Caswell, Julie A. & Mojduszka, Eliza M., 1996. "Using Informational Labeling To Influence The Market For Quality In Food Products," Working Papers 25989, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance. [Downloadable!]
  4. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August. [Downloadable!] (restricted)
    Other versions:
  5. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-29, March-Apr. [Downloadable!] (restricted)
  6. Robert J. Barro, 1986. "Reputation in a Model of Monetary Policy with Incomplete Information," NBER Working Papers 1794, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Farrell Joseph, 1993. "Meaning and Credibility in Cheap-Talk Games," Games and Economic Behavior, Elsevier, vol. 5(4), pages 514-531, October. [Downloadable!] (restricted)
    Other versions:
  8. Milgrom, Paul & Roberts, John, 1982. "Predation, reputation, and entry deterrence," Journal of Economic Theory, Elsevier, vol. 27(2), pages 280-312, August. [Downloadable!] (restricted)
    Other versions:
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gilles Grolleau & Lisette Ibanez & Naoufel Mzoughi, 2007. "Industrialists hand in hand with environmentalists: how eco-labeling schemes can help firms to raise rivals’ costs," European Journal of Law and Economics, Springer, vol. 24(3), pages 215-236, December. [Downloadable!] (restricted)
  2. Chang, Hui-Shung Christie, 2004. "Labelling Issues of Organic and GM Foods in Australia," Working Papers 12934, University of New England, School of Economics. [Downloadable!]
  3. Albersmeier, Friederike & Schulze, Holger & Spiller, Achim, 2007. "System Dynamics in Quality Certifications: Development of an Audit Quality Controlling System," 2007 1st Forum, February 15-17, 2007, Innsbruck, Austria 6585, International European Forum on Innovation and System Dynamics in Food Networks. [Downloadable!]
  4. Annunziata, Azzurra & Ianuario, Sara & Pascale, Paola, 2009. "Consumers’ attitudes toward labelling of ethical products: The case of organic and Fair Trade products," 83rd Annual Conference, March 30-April 1, 2009, Dublin, Ireland 50931, Agricultural Economics Society. [Downloadable!]
  5. Alexander E. Saak, 2002. "Identity Preservation and False Labeling in the Food Supply Chain," Food and Agricultural Policy Research Institute (FAPRI) Publications 02-wp295, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University. [Downloadable!]
  6. Anania, Giovanni & Nistico, Rosanna, 2003. "Public Regulation As A Substitute For Trust In Quality Food Markets. What If The Trust Substitute Cannot Be Fully Trusted?," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25924, International Association of Agricultural Economists. [Downloadable!]
    Other versions:
  7. Christensen, Bryan J. & Bailey, Deevon & Hunnicutt, Lynn & Ward, Ruby, 2003. "Consumer Preferences for Public and Private Sector Certifications for Beef Products in the United States and the United Kingdom," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 6(03). [Downloadable!]
  8. Marc Law & Gary D. Libecap, 2006. "The Determinants of Progressive Era Reform. The Pure Food and Drugs Act of 1906," NBER Chapters, in: Corruption and Reform: Lessons from America's Economic History, pages 319-342 National Bureau of Economic Research, Inc. [Downloadable!]
    Other versions:
  9. SHELDON, Ian & Roe, Brian, 2008. "Vertical Differentiation and Credence Goods: Harmonized Labeling and Gains from International Integration," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6340, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  10. Hoehn, John P. & Deaton, B. James, 2004. "The Welfare Consequences Of Certified Labeling For Credence Attributes," Staff Papers 11758, Michigan State University, Department of Agricultural, Food, and Resource Economics. [Downloadable!]
  11. Alexander E. Saak, 2002. "Identity Preservation and False Labeling in the Food Supply Chain," Center for Agricultural and Rural Development (CARD) Publications 02-wp295, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
  12. Lupton, Sylvie, 2009. "Commerce équitable et signaux : entre information et illusion
    [Fair trade and signalling: information and illusion]
    ," MPRA Paper 14560, University Library of Munich, Germany, revised 28 Mar 2009. [Downloadable!]
  13. Hobbs, Jill E., 2003. "Consumer Demand For Traceability," Working Papers 14614, International Agricultural Trade Research Consortium. [Downloadable!]
  14. Goldsmith, Peter & Turan, Nesve A. & Gow, Hamish, 2004. "Firms, Incentives, And The Supply Of Food Safety: A Formal Model Of Government Enforcement," 2004 Annual meeting, August 1-4, Denver, CO 20343, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  15. Zeynep Hansen & Marc T. Law, 2006. "The Political Economy of "Truth-in-Advertising" Regulation During the Progressive Era," NBER Working Papers 11927, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  16. Saak, Alexander E., 2003. "Identity Preservation And False Non-Gmo Labeling In The Food Supply Chain," 2003 Annual meeting, July 27-30, Montreal, Canada 22182, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  17. Anders, Sven & Monteiro, Diogo M. Souza & Rouviere, Elodie, 2007. "Objectiveness in the Market for Third-Party Certification: Does market structure matter?," 105th Seminar, March 8-10, 2007, Bologna, Italy 7894, European Association of Agricultural Economists. [Downloadable!]
  18. Saak, Alexander E., 2002. "Identity Preservation and False Labeling in the Food Supply Chain," Staff General Research Papers 2062, Iowa State University, Department of Economics. [Downloadable!]
  19. Wang, Qingbin & Sun, Junjie, 2003. "Consumer Preference And Demand For Organic Food: Evidence From A Vermont Survey," 2003 Annual meeting, July 27-30, Montreal, Canada 22080, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  20. Athearn, Kevin R., 2003. "Can Eco-Labeling Do More Harm Than Good? A Comparative Statics Analysis," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35105, Southern Agricultural Economics Association. [Downloadable!]
  21. Gilles Grolleau & Julie A. Caswell, 2005. "Interaction Between Food Attributes in Markets: The Case of Environmental Labeling," Working Papers 2005-5, University of Massachusetts Amherst, Department of Resource Economics. [Downloadable!]
    Other versions:
  22. Schulze, Holger & Albersmeier, Friederike & Spiller, Achim & Jahn, Gabriele, 2006. "Audit risk factors in certification: How can risk-oriented audits improve the quality of certification standards?," 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece 10108, European Association of Agricultural Economists. [Downloadable!]
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This page was last updated on 2009-11-26.


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