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Will Geographical Indications Supply Excessive Quality?

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  • Merel, Pierre R.
  • Sexton, Richard J.

Abstract

This study investigates the choice of quality by producer organisations (POs) in charge of defining product specifications for geographical indications. The model assumes that the PO chooses the quality level that maximises joint producer profits in anticipation of the competitive equilibrium that arises once quality is set. Using a fairly general variant of the vertical differentiation model and a flexible specification of production costs, we show that the PO has an incentive to supply quality in excess of the socially optimal level. , Oxford University Press.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114651.

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Date of creation: 02 Sep 2011
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Handle: RePEc:ags:eaae11:114651

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Related research

Keywords: Consumer/Household Economics; Marketing;

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  1. Pierre R. Mérel, 2008. "On the Deadweight Cost of Production Requirements for Geographically Differentiated Agricultural Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 642-655.
  2. Sergio H. Lence & Stéphan Marette & Dermot J. Hayes & William Foster, 2007. "Collective Marketing Arrangements for Geographically Differentiated Agricultural Products: Welfare Impacts and Policy Implications," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 947-963.
  3. A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
  4. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
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Cited by:
  1. Bouamra-Mechemache, Zohra & Jianyu, Yu, 2013. "Production Standards, Competition and Vertical Relationship," TSE Working Papers 13-417, Toulouse School of Economics (TSE).
  2. Bonroy, O. & Constantatos, C., 2013. "On the economics of labels : a review of the theoretical literature," Working Papers 2013-01, Grenoble Applied Economics Laboratory (GAEL).

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