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Reputations, Market Structure, and the Choice of Quality Assurance Systems in the Food Industry

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Author Info
Carriquiry, Miguel A.
Babcock, Bruce A.

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Abstract

Many food traits desired by consumers are costly to provide and difficult to verify. A complicating factor is that delivered quality can only be affected stochastically by producers and imperfectly observed by consumers. Markets for these goods will emerge only if supplying firms can be trusted. We develop a repeated purchases model to explore how quality discoverability, market structure, nature of reputations, market premiums, and discount factors drive firm choice about the stringency of quality assurance systems designed to gain consumer trust. Reputation protection is key incentive for firms to invest in high-quality goods and quality assurance systems.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12215.

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Date of creation: 11 Nov 2004
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Publication status: Published in American Journal of Agricultural Economics, February 2007, Vol. 89, No. 1, pp. 12-23.
Handle: RePEc:isu:genres:12215

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
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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. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June. [Downloadable!] (restricted)
  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. David A. Hennessy & Jutta Roosen & Helen H. Jensen, 2002. "Systemic Failure in the Provision of Safe Food," Center for Agricultural and Rural Development (CARD) Publications 02-wp299, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
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  4. De, Sankar & Nabar, Prafulla, 1991. "Economic implications of imperfect quality certification," Economics Letters, Elsevier, vol. 37(4), pages 333-337, December. [Downloadable!] (restricted)
  5. Dixit, Avinash K, 1986. "Comparative Statics for Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-22, February. [Downloadable!] (restricted)
  6. Shapiro, Carl, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, MIT Press, vol. 98(4), pages 659-79, November. [Downloadable!] (restricted)
  7. Fearne, Andrew & Hornibrook, Susan & Dedman, Sandra, 2001. "The Management Of Perceived Risk In The Food Supply Chain: A Comparative Study Of Retailer-Led Beef Quality Assurance Schemes In Germany And Italy," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 4(01). [Downloadable!]
  8. Hennessy, David A & Roosen, Jutta & Miranowski, John A, 2001. " Leadership and the Provision of Safe Food," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 83(4), pages 862-74, November. [Downloadable!] (restricted)
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  9. 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.
  10. Rafael Rob & Tadashi Sekiguchi, 2001. "Product Quality, Reputation and Turnover," Penn CARESS Working Papers 95ec48d1c0f2065e1d4aaeb99, Penn Economics Department. [Downloadable!]
  11. Unnevehr, Laurian J. & Jensen, Helen H., 1996. "HACCP as a Regulatory Innovation to Improve Food Safety in the Meat Industry," Staff General Research Papers 937, Iowa State University, Department of Economics. [Downloadable!]
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  12. Hennessy, David A., 2002. "Information Asymmetry as a Reason for Food Industry Vertical Integration," Staff General Research Papers 5032, Iowa State University, Department of Economics.
  13. Chalfant, James A. & James, Jennifer S. & Lavoie, Nathalie & Sexton, Richard J., 1999. "Asymmetric Grading Error And Adverse Selection: Lemons In The California Prune Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(01), July. [Downloadable!]
  14. 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)
  15. Mason, Charles F & Sterbenz, Frederic P, 1994. "Imperfect Product Testing and Market Size," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 61-86, February. [Downloadable!] (restricted)
  16. Noelke, Corinna M. & Caswell, Julie A., 2000. "A Model Of The Implementation Of Quality Management Systems For Credence Attributes," 2000 Annual meeting, July 30-August 2, Tampa, FL 21874, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  17. Reardon, Thomas & Farina, Elizabeth, 2001. "The Rise Of Private Food Quality And Safety Standards: Illustrations From Brazil," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 4(04). [Downloadable!]
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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. Rouviere, Elodie & Soubeyran, Raphael, 2008. "Collective Reputation, Entry and Minimum Safety Standard," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44465, European Association of Agricultural Economists. [Downloadable!]
  2. Marette, Stéphan, 2007. "Minimum Safety Standard, Consumers’ Information, and Competition (The)," Staff General Research Papers 12718, Iowa State University, Department of Economics. [Downloadable!]
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