Managing animal health status information in the cattle market
AbstractThe paper analyses the problem of information in the cattle market, particularly as it relates to the status of animal health, and discusses ways to limit it with the view to improving social surplus. Against this background, it aims to achieve three major objectives. Firstly, it describes the ways of improving the level of information through such schemes as Conventional Warranties and Third Party Certification and the different choices made by sellers and buyers in the presence of these schemes. Secondly, it studies the various ways by which these schemes make an impact on equilibria in different markets (i.e., the pooling market and the premium market), and, consequently, on the social surplus. Thirdly, it identifies the necessary conditions for a third party/public decision-maker to increase social surplus and reduce the negative externality caused by disease by managing and supporting Third Party Certification. The paper shows that product certification and product warranty cannot coexist because product warranty is suboptimal. It also shows that certification, and a possible supporting of certification or animal testing does not necessarily improve the safety of the trade.
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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 44064.
Date of creation: 2008
Date of revision:
Asymmetric information; Third-Party certification; Disease Externalities; Livestock Production/Industries;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-25 (All new papers)
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Staff General Research Papers
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- Miguel Carriquiry & Bruce A. Babcock, 2004. "Reputations, Market Structure, and the Choice of Quality Assurance Systems in the Food Industry," Center for Agricultural and Rural Development (CARD) Publications 04-wp377, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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