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Reputations, Market Structure, and the Choice of Quality Assurance Systems in the Food Industry

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  • Carriquiry, Miguel A.
  • Babcock, Bruce A.

Abstract

A repeated-purchases model is developed to explore the fundamental economic factors that lie behind the choice of different quality assurance systems and their associated degrees of stringency by firms. Differences in the quality discoverability of a sought-after attribute, market structure, attractiveness of a market, nature of reputations, and the value placed in the future are among the factors contributing to the implementation of widely diverse systems across participants in different markets. Close attention is paid to the role of reputations in providing the incentives for firms to deliver high-quality goods. We model three different scenarios - monopoly, duopoly with firm-specific reputations, and duopoly with industry-wide reputations - and compare the resulting welfare of processors and their customers. We also provide a rationale for the branding efforts of many firms to distinguish their products along the supply chain.

Suggested Citation

  • Carriquiry, Miguel A. & Babcock, Bruce A., 2005. "Reputations, Market Structure, and the Choice of Quality Assurance Systems in the Food Industry," 2005 Annual meeting, July 24-27, Providence, RI 19549, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea05:19549
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Minten, Bart & Singh, K.M. & Sutradhar, Rajib, 2013. "Branding and agricultural value chains in developing countries: Insights from Bihar (India)," Food Policy, Elsevier, vol. 38(C), pages 23-34.
    2. Baniak Andrzej & Grajzl Peter, 2013. "Equilibrium and Welfare in a Model of Torts with Industry Reputation Effects," Review of Law & Economics, De Gruyter, vol. 9(2), pages 265-302, October.
    3. repec:kap:ijhcfe:v:17:y:2017:i:2:d:10.1007_s10754-016-9208-2 is not listed on IDEAS
    4. repec:eee:jfpoli:v:74:y:2018:i:c:p:23-38 is not listed on IDEAS
    5. Minten, Bart & Singh, K.M. & Sutradhar, Rajib, 2011. "Branding in food retail of high value crops in Asia: Case of Makhana from Bihar (India)," MPRA Paper 54334, University Library of Munich, Germany, revised 31 Jan 2011.
    6. Bontemps, Christophe & Bouamra-Mechemache, Zohra & Simioni, Michel, 2012. "Quality Labels and Firm Survival in the French Cheese Industry," TSE Working Papers 12-335, Toulouse School of Economics (TSE).
    7. Rat-Aspert, Olivier & Weldegebriel, Habtu T. & Stott, Alistair W. & Fourichon, C., 2008. "Managing animal health status information in the cattle market," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44064, European Association of Agricultural Economists.
    8. Minten, Bart & Assefa, Thomas & Hirvonen, Kalle, 2017. "Can Agricultural Traders be Trusted? Evidence from Coffee in Ethiopia," World Development, Elsevier, vol. 90(C), pages 77-88.
    9. Minten, Bart & Singh, K.M. & Sutradhar, Rajib, 2010. "The makhana value chain and the fast emergence of branding in food retail: Evidence from Bihar (India)," MPRA Paper 54344, University Library of Munich, Germany, revised 14 Jan 2010.
    10. Jianyu Yu & Zohra Bouamra-Mechemache, 2016. "Production standards, competition and vertical relationship," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 43(1), pages 79-111.
    11. Gelaw, Fekadu & Speelman, Stijn & Van Huylenbroeck, Guido, 2016. "Farmers’ marketing preferences in local coffee markets: Evidence from a choice experiment in Ethiopia," Food Policy, Elsevier, vol. 61(C), pages 92-102.
    12. Rouviere, Elodie & Soubeyran, Raphael, 2008. "Collective Reputation, Entry and Minimum Safety Standard," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44465, European Association of Agricultural Economists.
    13. Minten, Bart & Singh, K.M. & Sutradhar, Rajib, 2011. "The rapid emergence of branding in food retail in Asia: Insights from Bihar (India)," MPRA Paper 54337, University Library of Munich, Germany, revised 14 Jan 2011.

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