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Food quality in domestic markets of developing economies:A comparative study of two countries

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  • Anneleen Vandeplas
  • Bart Minten

Abstract

Food quality has become an important determinant of success in global food trade and growers for international markets have to continuously adjust to buyers’ requirements. It is however not clear to what extent there is a demand for food quality - and how much buyers are willing to pay for it - in domestic food markets of developing economies. Based on unique comparable price and trader data in a poor country in Africa (Madagascar) and an emerging economy in Asia (India), we compare food quality and quality’s pricing. We find significantly better quality and higher quality premiums (using revealed as well as stated preference methods) in India than in Madagascar. We explain these observed differences through a simple theoretical model, solely based on large average income gaps between the two countries.

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Bibliographic Info

Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 28911.

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Date of creation: 2011
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Handle: RePEc:lic:licosd:28911

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Keywords: food quality; quality premiums; development;

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  1. John M. Antle, 1999. "The New Economics of Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 993-1010.
  2. David K. Lambert & William W. Wilson, 2003. "Valuing Varieties with Imperfect Output Quality Measurement," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 95-107.
  3. James Murphy & P. Allen & Thomas Stevens & Darryl Weatherhead, 2005. "A Meta-analysis of Hypothetical Bias in Stated Preference Valuation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 30(3), pages 313-325, 03.
  4. Thomas Reardon & C. Peter Timmer & Christopher B. Barrett & Julio Berdegué, 2003. "The Rise of Supermarkets in Africa, Asia, and Latin America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1140-1146.
  5. Dalton, Timothy J., 2004. "A household hedonic model of rice traits: economic values from farmers in West Africa," Agricultural Economics, Blackwell, vol. 31(2-3), pages 149-159, December.
  6. Gabszewicz, J.J. & Thisse, J.-F., . "Product differentiation with income disparities: an illustrative model," CORE Discussion Papers RP -494, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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Cited by:
  1. Minten, Bart & Murshid, K.A.S. & Reardon, Thomas, 2013. "Food Quality Changes and Implications: Evidence from the Rice Value Chain of Bangladesh," World Development, Elsevier, vol. 42(C), pages 100-113.
  2. Liang, Qiao & Hendrikse, George W. J. & Huang, Zuhui, 2010. "Quality provision and governance structure variety: Pooling versus double markup," IAMO Forum 2010: Institutions in Transition – Challenges for New Modes of Governance 52694, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
  3. Schipmann, Christin & Qaim, Matin, 2011. "Modern food retailers and traditional markets in developing countries: Comparing quality, prices, and competition strategies in Thailand," Discussion Papers 108348, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
  4. Demont, Matty & Zossou, Esperance & Rutsaert, Pieter & Ndour, Maimouna & Mele, Paul Van & Verbeke, Wim, 2011. "Willingness to Pay for Enhanced Food Quality: Rice Parboiling in Benin," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114443, European Association of Agricultural Economists.

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