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Geographical Indications and the Competitive Provision of Quality in Agricultural Markets

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Author Info
Moschini, GianCarlo
Menapace, Luisa
Pick, Daniel

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Abstract

The economics of geographical indications (GIs) is assessed within a vertical product differentiation framework that is consistent with the competitive structure of the agricultural sector with free entry/exit. It is assumed that certification costs are needed for GIs to serve as (collective) credible quality certification devices, and production of high-quality product is endogenously determined. We find that GIs can support a competitive provision of quality that partly overcomes the market failure and leads to clear welfare gains, although they fall short of delivering the (constrained) first-best level of the high-quality good. The main beneficiaries of the welfare gains are consumers. Producers may also accrue some benefit if the production of high-quality products draws on scarce factors that they own.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12858.

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Date of creation: 04 Jan 2008
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Publication status: Published in American Journal of Agricultural Economics, 2008, Vol. 90, pp. 794-812.
Handle: RePEc:isu:genres:12858

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
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Related research
Keywords: competitive industry; free entry/exit; geographical indications; Marshallian stability; quality certification; trademarks; welfare.;

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This paper has been announced in the following NEP Reports: 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. Lence, Sergio H. & Marette, Stephan & Hayes, Dermot J. & Foster, William, 2007. "Collective Marketing Arrangements for Geographically Differentiated Agricultural Products: Welfare Impacts and Policy Implications," Staff General Research Papers 12758, Iowa State University, Department of Economics. [Downloadable!]
    Other versions:
  2. Plott, Charles R & George, Glen, 1992. "Marshallian vs. Walrasian Stability in an Experimental Market," Economic Journal, Royal Economic Society, vol. 102(412), pages 437-60, May. [Downloadable!] (restricted)
  3. Langinier, Corinne & Babcock, Bruce A., 2006. "Agricultural Production Clubs: Viability and Welfare Implications," Staff General Research Papers 12670, Iowa State University, Department of Economics. [Downloadable!]
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  4. Landes, William M & Posner, Richard A, 1987. "Trademark Law: An Economic Perspective," Journal of Law & Economics, University of Chicago Press, vol. 30(2), pages 265-309, October.
  5. Hughes, Joseph P, 1980. "The Comparative Statics of the Competitive, Increasing-Cost Industry," American Economic Review, American Economic Association, vol. 70(3), pages 518-21, June. [Downloadable!] (restricted)
  6. 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!]
  7. Roxanne Clemens, 2002. "Why Can't Vidalia Onions Be Grown in Iowa? Developing a Branded Agricultural Product," Center for Agricultural and Rural Development (CARD) Publications 02-mbp3, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
  8. Tim Josling, 2006. "The War on "Terroir": Geographical Indications as a Transatlantic Trade Conflict," Journal of Agricultural Economics, Blackwell Publishing, vol. 57(3), pages 337-363. [Downloadable!] (restricted)
  9. Roxanne Clemens, 2002. "Why Can't Vidalia Onions Be Grown in Iowa? Developing a Branded Agricultural Product," Midwest Agribusiness Trade Research and Information Center (MATRIC) Publications 02-mbp3, Midwest Agribusiness Trade Research and Information Center (MATRIC) at Iowa State University. [Downloadable!]
  10. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August. [Downloadable!] (restricted)
  11. GianCarlo Moschini, 2003. "Intellectual Property Rights and the World Trade Organization: Retrospect and Prospects," Center for Agricultural and Rural Development (CARD) Publications 03-wp334, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
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  12. Allen, Douglas W & Lueck, Dean, 1998. "The Nature of the Farm," Journal of Law & Economics, University of Chicago Press, vol. 41(2), pages 343-86, October.
  13. Panzar, John C & Willig, Robert D, 1978. "On the Comparative Statics of a Competitive Industry with Inframarginal Firms," American Economic Review, American Economic Association, vol. 68(3), pages 474-78, June. [Downloadable!] (restricted)
  14. Hayes, Dermot J. & Lence, Sergio H. & Stoppa, Andrea, 2004. "Farmer-Owned Brands?," Staff General Research Papers 11285, Iowa State University, Department of Economics.
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  15. Chipman, John S, 1970. "External Economies of Scale and Competitive Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 347-85, August. [Downloadable!] (restricted)
  16. 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)
  17. Giovanni Anania & Rosanna Nisticò, 2004. "Public Regulation as a Substitute for Trust in Quality Food Markets: What if the Trust Substitute cannot be Fully Trusted?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(4), pages 681-, December.
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  18. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August. [Downloadable!] (restricted)
  19. Clemens, Roxanne, 2002. "Why Can't Vidalia Onions Be Grown in Iowa? Developing a Branded Agricultural Product," Staff General Research Papers 10025, Iowa State University, Department of Economics. [Downloadable!]
  20. Bruce Gardner, 2003. "U.S. Food Quality Standards: Fix for Market Failure or Costly Anachronism?," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 85(3), pages 725-730, 08. [Downloadable!] (restricted)
  21. Benitez, D. & Bouamra-Mechemache, Z. & Chaaban, J., 2005. "Public labeling revisited : the role of technological constraints under protected designation of origin regulation," Economics Working Paper Archive (Toulouse) 200521, French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse). [Downloadable!]
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  1. Menapace, Luisa & Colson, Greg & Grebitus, Carola & Facendola, Maria, 2008. "Consumer preferences for extra virgin olive oil with country-of-origin and geographical indication labels in Canada," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6430, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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