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Public Regulation As A Substitute For Trust In Quality Food Markets. What If The Trust Substitute Cannot Be Fully Trusted?

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  • Anania, Giovanni
  • Nistico, Rosanna

Abstract

Most food products can be classified as "credence" goods and regulations exist to provide consumers with a substitute for the lacking information and trust. The paper presents an analysis of the decisions of producers and consumers about a "credence" good in three institutional scenarios, which reflect different levels of credibility of the regulation. The first scenario is a reference scenario in which the regulation is fully credible. In the second case considered there is no regulation, or, if there is, it is totally ineffective. In the third scenario a regulation only partially credible provides consumers with an imperfect substitute for the information and trust they lack. Some of the producers of "low" quality goods share with the producers of "high" quality goods an interest in the introduction of a regulation as long as this is not fully credible. In addition, it may be the case that even producers of "low" quality goods who know they will not be able to sell their products labeling them as being of "high" quality may have an interest in supporting a not fully credible regulation. Finally, rather than having producers of "low" quality goods "block" the introduction of a fully credible regulation, producers of "high" quality goods are better off when a compromise is reached which leads to the approval of an imperfect regulation.

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Bibliographic Info

Paper provided by International Association of Agricultural Economists in its series 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa with number 25924.

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Date of creation: 2003
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Handle: RePEc:ags:iaae03:25924

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Keywords: Food Consumption/Nutrition/Food Safety;

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References

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Citations

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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. Nadia Cuffaro & Marina Di Giacinto, 2011. "High quality exports and consumers’ trust: a development perspective," Working Papers 2011-04, Universita' di Cassino, Dipartimento di Scienze Economiche.
  3. Friederike Albersmeier & Holger Schulze & Achim Spiller, 2009. "Evaluation and reliability of the organic certification system: perceptions by farmers in Latin America," Sustainable Development, John Wiley & Sons, Ltd., vol. 17(5), pages 311-324.
  4. Chuthaporn Ngokkuen & Ulrike Grote, 2012. "Challenges and opportunities for protecting geographical indications in Thailand," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 19(2), pages 93-123, December.
  5. Auriol, Emmanuelle & Schilizzi, Steven, 2003. "Quality Signaling through Certification. Theory and an Application to Agricultural Seed Market," IDEI Working Papers 165, Institut d'Économie Industrielle (IDEI), Toulouse.
  6. Hobbs, Jill E. & Innes, Brian G. & Uzea, Adrian D. & Zhang, Jing, 2012. "Food Quality Verifications and Consumer Trust," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 135069, Agricultural Economics Society.
  7. Anders, Sven & Souza Monteiro, Diogo M. & 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.
  8. Ferrier, Peyton, 2010. "Irradiation as a quarantine treatment," Food Policy, Elsevier, vol. 35(6), pages 548-555, December.
  9. Zago, Angelo M. & Pick, Daniel H., 2004. "Labeling Policies in Food Markets: Private Incentives, Public Intervention, and Welfare Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(01), April.

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