Information As A Double-Edge Sword: Implications For Food Standards And Labels
An analytical model is developed to examine product quality labeling. Prior to labeling all consumers are willing to pay a premium for the quality characteristic but product quality cannot be observed directly. If production costs are increasing, the total quantity produced may contain a mix of products - with and without the high-valued attribute. In the pooled equilibrium demand is influenced by perceptions of the product mix. After labels are introduced the market is separated into two sectors, conventional and high-valued. The economic implications of labels are examined by contrasting welfare in the separating equilibrium with welfare in the pooled equilibrium. Under the models' maintained assumptions the conventional sector loses welfare, while producers of the high-valued product experience gains. In addition, producers of the high-valued product may have incentives to promote costly labeling despite net-welfare losses.
|Date of creation:||2003|
|Contact details of provider:|| Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202|
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hayes, Dermot J. & Lence, Sergio H. & Stoppa, Andrea, 2004.
Staff General Research Papers Archive
11285, Iowa State University, Department of Economics.
- Dermot J. Hayes & Sergio H. Lence & Andrea Stoppa, 2003. "Farmer-Owned Brands?," Center for Agricultural and Rural Development (CARD) Publications 02-bp39, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Hayes, Dermot J. & Lence, Sergio H., 2002. "Farmer-Owned Brands?," Staff General Research Papers Archive 12707, Iowa State University, Department of Economics.
- Fetter, T. Robert & Caswell, Julie A., 2002.
"Variation in Organic Standards Prior to the National Organic Program,"
25151, University of Connecticut, Food Marketing Policy Center.
- T. Robert Fetter & Julie A. Caswell, 2002. "Variation in Organic Standards Prior to the National Organic Program," Food Marketing Policy Center Research Reports 072, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
- Golan, Elise H. & Kuchler, Fred & Mitchell, Lorraine, 2000. "Economics Of Food Labeling," Agricultural Economics Reports 34069, United States Department of Agriculture, Economic Research Service.
- Loureiro, Maria L. & Hine, Susan E., 2001. "Discovering Niche Markets: A Comparison Of Consumer Willingness To Pay For A Local (Colorado Grown), Organic, And Gmo-Free Product," 2001 Annual meeting, August 5-8, Chicago, IL 20630, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, vol. 69, pages 213-213.
- Hayes, Dermot J. & Lence, Sergio H., 2002. "A New Brand of Agriculture: Farmer-Owned Brands Reward Innovation," Choices, Agricultural and Applied Economics Association, vol. 17(3).
- Joseph E. Stiglitz, 2002.
"Information and the Change in the Paradigm in Economics,"
American Economic Review,
American Economic Association, vol. 92(3), pages 460-501, June.
- Stiglitz, Joseph E., 2001. "Information and the Change in the Paradigm in Economics," Nobel Prize in Economics documents 2001-8, Nobel Prize Committee.
- Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
- Teisl, Mario F. & Roe, Brian & Hicks, Robert L., 2002. "Can Eco-Labels Tune a Market? Evidence from Dolphin-Safe Labeling," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 339-359, May.
- Hill, Lowell D., 1988. "Grain Grades: They Lack Economic Rational," Choices, Agricultural and Applied Economics Association, vol. 3(1).
- Klonsky, Karen & Tourte, Laura & Thompson, Gary D. & Lohr, Luanne & Krissoff, Barry, 1998. "Emergence Of U.S. Organic Agriculture: Can We Compete?," Faculty Series 16704, University of Georgia, Department of Agricultural and Applied Economics.
When requesting a correction, please mention this item's handle: RePEc:ags:aaea03:22235. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.