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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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Author Info
Anania, Giovanni
Nistico, Rosanna

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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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Publisher 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 listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Winand Emons, 1994. "Credence Goods and Fraudulent Experts," Diskussionsschriften dp9402, Universitaet Bern, Departement Volkswirtschaft.
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  2. Caswell, Julie A. & Mojduszka, Eliza M., 1996. "Using Informational Labeling To Influence The Market For Quality In Food Products," Working Papers 25989, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance. [Downloadable!]
  3. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August. [Downloadable!] (restricted)
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  4. Bennett, R. M., 1997. "Farm animal welfare and food policy," Food Policy, Elsevier, vol. 22(4), pages 281-288, August. [Downloadable!] (restricted)
  5. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-29, March-Apr. [Downloadable!] (restricted)
  6. De, Sankar & Nabar, Prafulla, 1991. "Economic implications of imperfect quality certification," Economics Letters, Elsevier, vol. 37(4), pages 333-337, December. [Downloadable!] (restricted)
  7. Crespi, John M & Marette, Stephan, 2001. " How Should Food Safety Certification Be Financed?," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 83(4), pages 852-61, November. [Downloadable!] (restricted)
  8. Holland, Daniel & Wessells, Cathy R., 1998. "Predicting Consumer Preferences For Fresh Salmon: The Influence Of Safety Inspection And Production Method Attributes," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(1), April. [Downloadable!]
  9. 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. [Downloadable!]
  10. Timothy J. Feddersen & Thomas W. Gilligan, 2001. "Saints and Markets: Activists and the Supply of Credence Goods," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 10(1), pages 149-171, 03. [Downloadable!] (restricted)
  11. Marette, Stephan & Bureau, Jean-Christophe & Gozlan, Estelle, 2000. "Product Safety Provision and Consumers' Information," Australian Economic Papers, Blackwell Publishing, vol. 39(4), pages 426-41, December. [Downloadable!] (restricted)
  12. 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. [Downloadable!]
  13. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-41, August. [Downloadable!] (restricted)
  14. Emons, Winand, 2001. "Credence goods monopolists," International Journal of Industrial Organization, Elsevier, vol. 19(3-4), pages 375-389, March. [Downloadable!] (restricted)
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  15. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law & Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
  16. Noussair, Charles & Robin, Stephane & Ruffieux, Bernard, 2002. "Do consumers not care about biotech foods or do they just not read the labels?," Economics Letters, Elsevier, vol. 75(1), pages 47-53, March. [Downloadable!] (restricted)
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  17. Spencer Henson, 1996. "Consumer Willingness To Pay For Reductions In The Risk Of Food Poisoning In The Uk," Journal of Agricultural Economics, Blackwell Publishing, vol. 47(1-4), pages 403-420. [Downloadable!] (restricted)
  18. Nimon, Wesley & Beghin, John, 1999. "Are Eco-Labels Valuable? Evidence from the Apparel Industry," Staff General Research Papers 4048, Iowa State University, Department of Economics. [Downloadable!]
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  19. Stefanie Kirchhoff, 2000. "Green Business and Blue Angels," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 15(4), pages 403-420, April. [Downloadable!] (restricted)
  20. Justus Haucap & Christian Wey & Jens F. Barmbold, 1997. "Location Choice as a Signal for Product Quality: The Economics of 'Made in Germany'," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 153(3), pages 510-, September.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Marette, Stéphan, 2005. "Collective-Quality Promotion in the Agribusiness Sector: An Overview, The," Staff General Research Papers 12431, Iowa State University, Department of Economics. [Downloadable!]
  2. GianCarlo Moschini & Luisa Menapace & Daniel Pick, 2008. "Geographical Indications and the Competitive Provision of Quality in Agricultural Markets," Center for Agricultural and Rural Development (CARD) Publications 08-wp458, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
    Other versions:
  3. Stephan Marette, 2005. "The Collective-Quality Promotion in the Agribusiness Sector: An Overview," Center for Agricultural and Rural Development (CARD) Publications 05-wp406, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
    Other versions:
  4. 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. [Downloadable!]
  5. Anders, Sven & Monteiro, Diogo M. Souza & 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. [Downloadable!]
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