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Lending credence: motivation, trust, and organic certification

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  • Steve Holland

    () (Luther College)

Abstract

Abstract The information asymmetries inherent in credence goods have typically led economists to conclude these markets require well-defined quality standards and third-party verification that producers are meeting those standards. Nonetheless, many producers of credence goods appear to be opting out of certification. Why? This paper builds in previous research and develops a theoretical framework to think about how producers’ motivation and relationships with consumers affect the necessity and effectiveness of certification. I find the degree to which a consumer trusts the producer of a credence good and the certification standard that governs it and the degree to which the producer is motivated to produce a good of a certain quality both have important effects on certification-based regulation.

Suggested Citation

  • Steve Holland, 2016. "Lending credence: motivation, trust, and organic certification," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 4(1), pages 1-18, December.
  • Handle: RePEc:spr:agfoec:v:4:y:2016:i:1:d:10.1186_s40100-016-0058-5
    DOI: 10.1186/s40100-016-0058-5
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    References listed on IDEAS

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    1. Kallas, Zein & Serra, Teresa & Gil, Jose Maria, 2009. "Farmer’s objectives as determinant factors of organic farming adoption," 113th Seminar, September 3-6, 2009, Chania, Crete, Greece 58035, European Association of Agricultural Economists.
    2. Winand Emons, 1997. "Credence Goods and Fraudelent Experts," RAND Journal of Economics, The RAND Corporation, vol. 28(1), pages 107-119, Spring.
    3. Konstantinos Giannakas, 2002. "Information Asymmetries and Consumption Decisions in Organic Food Product Markets," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 50(1), pages 35-50, March.
    4. Julie A. Caswell & Eliza M. Mojduszka, 1996. "Using Informational Labeling to Influence the Market for Quality in Food Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1248-1253.
    5. Golan, Elise H. & Kuchler, Fred & Mitchell, Lorraine, 2000. "Economics Of Food Labeling," Agricultural Economics Reports 34069, United States Department of Agriculture, Economic Research Service.
    6. Ward, Ruby A. & Hunnicutt, Lynn & Keith, John E., 2004. "If You Can't Trust the Farmer, Who Can You Trust? The Effect of Certification Types on Purchases of Organic Produce," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 7(1), pages 1-18.
    7. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
    8. McCluskey, Jill J., 2000. "A Game Theoretic Approach to Organic Foods: An Analysis of Asymmetric Information and Policy," Agricultural and Resource Economics Review, Cambridge University Press, vol. 29(1), pages 1-9, April.
    9. Munasib, Abdul B.A. & Jordan, Jeffrey L., 2011. "The Effect of Social Capital on the Choice to Use Sustainable Agricultural Practices," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 43(2), pages 213-227, May.
    10. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
    11. Brian Roe & Ian Sheldon, 2007. "Credence Good Labeling: The Efficiency and Distributional Implications of Several Policy Approaches," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 1020-1033.
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    Cited by:

    1. Hoi Quoc Le & Thi Minh Nguyen, 2018. "Behaviors in the market for safe vegetables under information asymmetry: modeling approach," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(3), pages 381-392, December.
    2. Andrew Gerard & Maria Claudia Lopez & Aaron M. McCright, 2019. "Coffee Roasters’ Sustainable Sourcing Decisions and Use of the Direct Trade Label," Sustainability, MDPI, Open Access Journal, vol. 11(19), pages 1-19, September.
    3. Nordblom, Thomas L. & Penfold, Chris & Weckert, Melanie & Norton, Mark R., 2017. "Straw and living mulches compared with herbicide for under-vine weed control in a Public-Private Benefit Framework," 2017 Conference (61st), February 7-10, 2017, Brisbane, Australia 258677, Australian Agricultural and Resource Economics Society.

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