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Valuing Varieties with Imperfect Output Quality Measurement


  • David K. Lambert
  • William W. Wilson


Markets for agricultural products may be inefficient when signals do not adequately reflect product characteristics important to market participants. Preferences can be explicitly reflected in price premiums for measurable characteristics using hedonic methods. However, when product quality information is costly to obtain, the problem is compounded. Bundling of quality traits by variety can serve to signal product quality. A procedure is developed to derive the value of different varieties in meeting buyer demands. An application to the hard red spring market wheat illustrates the use of a procedure to distinguish among varieties and provides empirical support for the existence of Akerlof's lemon market in the release of wheat varieties. Copyright 2003, Oxford University Press.

Suggested Citation

  • 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.
  • Handle: RePEc:oup:ajagec:v:85:y:2003:i:1:p:95-107

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    References listed on IDEAS

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    5. Knoeber, Charles R, 1989. "A Real Game of Chicken: Contracts, Tournaments, and the Production of Broilers," Journal of Law, Economics, and Organization, Oxford University Press, vol. 5(2), pages 271-292, Fall.
    6. Howard Beales, J. III & Muris, Timothy J., 1995. "The foundations of franchise regulation: Issues and evidence," Journal of Corporate Finance, Elsevier, vol. 2(1-2), pages 157-197, October.
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    Cited by:

    1. Kurt B. Waldman & David L. Ortega & Robert B. Richardson & Daniel C. Clay & Sieglinde Snapp, 2016. "Preferences for legume attributes in maize-legume cropping systems in Malawi," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 8(6), pages 1087-1099, December.
    2. 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.
    3. MacDonald, James M. & Perry, Janet E. & Ahearn, Mary Clare & Banker, David E. & Chambers, William & Dimitri, Carolyn & Key, Nigel D. & Nelson, Kenneth E. & Southard, Leland W., 2004. "Contracts, Markets, and Prices: Organizing the Production and Use of Agricultural Commodities," Agricultural Economics Reports 34013, United States Department of Agriculture, Economic Research Service.
    4. K. W. Chau & Lennon H. T. Choy, 2011. "Let the Buyer or Seller Beware: Measuring Lemons in the Housing Market under Different Doctrines of Law Governing Transactions and Information," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages 347-365.
    5. Anneleen Vandeplas & Bart Minten, 2015. "Food quality in domestic markets of developing economies: a comparative study of two countries," Agricultural Economics, International Association of Agricultural Economists, vol. 46(5), pages 617-628, September.
    6. Efthymios G. Tsionas & Subal C. Kumbhakar & Emir Malikov, 2015. "Estimation of Input Distance Functions: A System Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(5), pages 1478-1493.
    7. Venkatesh, P. & Sangeetha, V. & Pal, Suresh, 2015. "India’s Experience of Plant Variety Protection: Trends, Determinants and Impact," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 200413, Agricultural and Applied Economics Association;Western Agricultural Economics Association.

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