Are geographical indications a worthy quality label? A framework with endogenous quality choice
AbstractWe analyze the effects of Geographical Indication (GI) labeling on quality choices and welfare with two vertically differentiated goods, one labelable, the other not. We consider two attributes of these goods: gustatory quality and geographical origin. We investigate two extreme cases of the Protected Designation of Origin (PDO) label: a denomination standard, which guarantees only the origin of the product, without any requirement on production specifications; and a minimum quality requirement, which guarantees both the origin and the quality of the product. We find that the PDO good is not necessarily the high-quality good. When it is, the introduction of the denomination standard causes its quality to decrease. Binding production specifications that maintain the quality level of the labeled good adversely affect the PDO firm.
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Bibliographic InfoPaper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 11-263.
Date of creation: Dec 2011
Date of revision: Jun 2012
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
This paper has been announced in the following NEP Reports:
- NEP-AGR-2012-01-10 (Agricultural Economics)
- NEP-ALL-2012-01-10 (All new papers)
- NEP-GEO-2012-01-10 (Economic Geography)
- NEP-URE-2012-01-10 (Urban & Real Estate Economics)
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