Minimum Quality Standards and brand development in agrifood chains
AbstractThis paper develops an original framework to better understand the interaction between the development of brands and the quality of raw materials. We consider different levels of consumer trust for a brand and we examine the incentive for firms to improve the quality of a processed product by requiring that upstream suppliers adopt a private standard. In contrast to previous literature, the incentive for firms to develop a more stringent private standard may increase with the level of the regulated minimum quality standard. Moreover, the creation of a private standard can reduce the risk of consumer dissatisfaction while increasing the marketed quantity. Unexpected positive effects of a reinforcement of the minimum quality standard may arise, in the sense that both market access for upstream producers and consumer surplus are improved and final price may decrease with respect to simply complying with the regulation.
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Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 43865.
Date of creation: 2008
Date of revision:
Minimum Quality Standard; brand; vertical relationship; Agribusiness;
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