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The Strategic Use of Private Quality Standards in Food Supply Chains

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  • Vanessa von Schlippenbach
  • Isabel Teichmann

Abstract

This paper highlights the strategic role that private quality standards play in food supply chains. Considering two symmetric retailers that are exclusively supplied by a finite number of producers and endogenizing the producers' delivery choice, we show that there exist two asymmetric equilibria in the retailers' quality requirements. The asymmetry is driven by both the retailers.incentive to raise their buyer power and the retailers' competition for suppliers. We find that the use of private quality standards is detrimental to social welfare. A public minimum quality standard can remedy this unfavorable welfare outcome.

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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1120.

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Length: 29 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diwwpp:dp1120

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Keywords: Private quality standards; vertical relations; buyer power; food supply chain;

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References

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Cited by:
  1. von Schlippenbach, Vanessa & Teichmann, Isabel, 2012. "The strategic use of private quality standards in food supply chains," DICE Discussion Papers 62, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  2. Bouamra-Mechemache, Zohra & Jianyu, Yu, 2013. "Production Standards, Competition and Vertical Relationship," TSE Working Papers 13-417, Toulouse School of Economics (TSE).

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