IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-09-00513.html
   My bibliography  Save this article

Consumer confusion and multiple equilibria

Author

Listed:
  • Stéphan Marette

    (UMR Economie Publique INRA)

Abstract

This paper focuses on consumer confusion when firms may choose between credible and non-credible certification systems for signalling quality. It is shown that the presence of confused consumers leads to the emergence of multiple stable equilibria, in which either all firms select the credible certification or all firms select the non-credible certification. A situation with numerous confused consumers is characterized by the complete absence of credible certification.

Suggested Citation

  • Stéphan Marette, 2010. "Consumer confusion and multiple equilibria," Economics Bulletin, AccessEcon, vol. 30(2), pages 1120-1128.
    • Handle: RePEc:ebl:ecbull:eb-09-00513
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I2-P105.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Olivier Bonroy & Christos Constantatos, 2008. "On the use of labels in credence goods markets," Journal of Regulatory Economics, Springer, vol. 33(3), pages 237-252, June.
    2. Paolo Garella & Emmanuel Petrakis, 2008. "Minimum quality standards and consumers’ information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 36(2), pages 283-302, August.
    3. Amacher, Gregory S. & Koskela, Erkki & Ollikainen, Markku, 2004. "Environmental quality competition and eco-labeling," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 284-306, March.
    4. Charles Wilson, 1980. "The Nature of Equilibrium in Markets with Adverse Selection," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 108-130, Spring.
    5. Alessandro Lizzeri, 1999. "Information Revelation and Certification Intermediaries," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 214-231, Summer.
    6. Albano, Gian Luigi & Lizzeri, Alessandro, 2001. "Strategic Certification and Provision of Quality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(1), pages 267-283, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stéphan Marette & Françoise Guéraud & Fabrice H.F. Pierre, 2021. "Regulation and Consumer Interest in an Antioxidant-Enriched Ham Associated with Reduced Colorectal Cancer Risks [Réglementation et intérêt des consommateurs pour un jambon enrichi en antioxydants a," Post-Print hal-03219714, HAL.
    2. Yokessa, Maïmouna & Marette, Stéphan, 2019. "A Review of Eco-labels and their Economic Impact," International Review of Environmental and Resource Economics, now publishers, vol. 13(1-2), pages 119-163, April.
    3. S. Marette & L. Nabec & F. Durieux, 2019. "Improving Nutritional Quality of Consumers’ Food Purchases With Traffic-Lights Labels: An Experimental Analysis," Journal of Consumer Policy, Springer, vol. 42(3), pages 377-395, September.
    4. Marette Stéphan & Roosen Jutta & Blanchemanche Sandrine, 2011. "The Combination of Lab and Field Experiments for Benefit-Cost Analysis," Journal of Benefit-Cost Analysis, De Gruyter, vol. 2(3), pages 1-36, August.
    5. Dorothée Brécard, 2017. "Consumer misperception of eco-labels, green market structure and welfare," Journal of Regulatory Economics, Springer, vol. 51(3), pages 340-364, June.
    6. Alexander J. Stein & Marcelo Lima, 2022. "Sustainable food labelling: considerations for policy-makers," Review of Agricultural, Food and Environmental Studies, Springer, vol. 103(2), pages 143-160, June.
    7. Marette, Stephan, 2017. "Quality, market mechanisms and regulation in the food chain," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(3), February.
    8. Marette, Stéphan & Millet, Guy, 2014. "Economic benefits from promoting linseed in the diet of dairy cows for reducing methane emissions and improving milk quality," Food Policy, Elsevier, vol. 46(C), pages 140-149.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dorothée Brécard, 2017. "Consumer misperception of eco-labels, green market structure and welfare," Journal of Regulatory Economics, Springer, vol. 51(3), pages 340-364, June.
    2. Yokessa, Maïmouna & Marette, Stéphan, 2019. "A Review of Eco-labels and their Economic Impact," International Review of Environmental and Resource Economics, now publishers, vol. 13(1-2), pages 119-163, April.
    3. Sabyasachi Das, 2016. "Certification Under Oligopolistic Competition," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(1), pages 251-271, September.
    4. Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2013. "Certification of corporate social responsibility activities in oligopolistic markets," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(1), pages 282-309, February.
    5. Creane, Anthony & Jeitschko, Thomas D. & Sim, Kyoungbo, 2022. "Welfare effects of product certification under latent adverse selection," International Journal of Industrial Organization, Elsevier, vol. 81(C).
    6. Creane, Anthony & Jeitschko, Thomas & Sim, Kyoungbo, 2019. "Welfare Effects of Certification under Latent Adverse Selection," MPRA Paper 92595, University Library of Munich, Germany.
    7. Sungho Yun, 2021. "Regulating corruptible certifier behavior," Journal of Regulatory Economics, Springer, vol. 59(2), pages 109-135, April.
    8. Xujin Pu & Huanzhen Zhang, 2016. "Voluntary Certification of Agricultural Products in Competitive Markets: The Consideration of Boundedly Rational Consumers," Sustainability, MDPI, vol. 8(9), pages 1-13, September.
    9. Martin Pollrich & Lilo Wagner, "undated". "Informational opacity and honest certication," BDPEMS Working Papers 2013001, Berlin School of Economics.
    10. Gill, David & Sgroi, Daniel, 2008. "The Optimal Choice of Pre-launch Reviewer : How Best to Transmit Information using Tests and Conditional Pricing," The Warwick Economics Research Paper Series (TWERPS) 877, University of Warwick, Department of Economics.
    11. Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2015. "Strategic Corporate Social Responsibility by Multinational Enterprises," Working Papers 1501, University of Crete, Department of Economics.
    12. Strausz, Roland, 2010. "Separating Equilibria with Imperfect Certification," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 324, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    13. Rick Harbaugh & John W. Maxwell & Beatrice Roussillon, 2011. "Label Confusion: The Groucho Effect of Uncertain Standards," Management Science, INFORMS, vol. 57(9), pages 1512-1527, February.
    14. Zhicheng Weng & Pinliang Luo, 2021. "Supervision of the Default Risk of Online Car-Hailing Platform from an Evolutionary Game Perspective," Sustainability, MDPI, vol. 13(2), pages 1-19, January.
    15. Marcus Alexander & Matthew C. Harding & Department of Economics & MIT, 2003. "Self-regulation and the Certification of the European Information Economy The Case of e-Healthcare Information Provision," Economics Series Working Papers 154, University of Oxford, Department of Economics.
    16. Strausz, Roland, 2005. "Honest certification and the threat of capture," International Journal of Industrial Organization, Elsevier, vol. 23(1-2), pages 45-62, February.
    17. Maarten C.W. Janssen & Vladimir Karamychev, 2000. "Continuous Time Trading in Markets with Adverse Selection," Tinbergen Institute Discussion Papers 00-109/1, Tinbergen Institute.
    18. Maarten Janssen & Santanu Roy, 2004. "On durable goods markets with entry and adverse selection," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(3), pages 552-589, August.
    19. Gerardi, Dino & Grillo, Edoardo & Monzón, Ignacio, 2022. "The perils of friendly oversight," Journal of Economic Theory, Elsevier, vol. 204(C).
    20. Yi Wang & Zhanguo Zhu & Feng Chu, 2017. "Organic vs. Non-Organic Food Products: Credence and Price Competition," Sustainability, MDPI, vol. 9(4), pages 1-23, April.

    More about this item

    Keywords

    Quality; certification;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-09-00513. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.