Gilles Grolleau () (Centre d’Economie et Sociologie appliquées à l’Agriculture et aux Espaces Ruraux) Julie A. Caswell () (Department of Resource Economics, University of Massachusetts Amherst)
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Some consumers derive utility from using products produced with specific processes, such as environmentally friendly practices. Means of verifying these credence attributes, such as certification, are necessary for the market to function effectively. A substitute or complementary solution may exist when consumers perceive a relationship between a process attribute and other verifiable product attributes. We present a model where the level of search and experience attributes influences the likelihood of production of eco-friendly products. Our results suggest that the market success of ecofriendly food products requires a mix of environmental and other verifiable attributes that together signal credibility.
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Paper provided by University of Massachusetts Amherst, Department of Resource Economics in its series Working Papers with number
2005-5.
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