A Game Theoretic Approach to Organic Foods: An Analysis of Asymmetric Information and Policy
AbstractDemand 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 profitmaximizing 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 outcome). 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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Bibliographic InfoPaper provided by Australian Agricultural and Resource Economics Society in its series 2000 Conference (44th), January 23-25, 2000, Sydney, Australia with number 123706.
Date of creation: 29 Jul 1999
Date of revision:
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Postal: AARES Central Office Manager, Crawford School of Public Policy, ANU, Canberra ACT 0200
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More information through EDIRC
credence goods; organic foods.; Agricultural and Food Policy; Food Consumption/Nutrition/Food Safety; L15; Q13;
Other versions of this item:
- McCluskey, Jill J., 2000. "A Game Theoretic Approach To Organic Foods: An Analysis Of Asymmetric Information And Policy," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(1), April.
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
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