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Will Geographical Indications Supply Excessive Quality?

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  • Merel, Pierre R.
  • Sexton, Richard J.

Abstract

This study investigates the choice of quality by producer organisations (POs) in charge of defining product specifications for geographical indications. The model assumes that the PO chooses the quality level that maximises joint producer profits in anticipation of the competitive equilibrium that arises once quality is set. Using a fairly general variant of the vertical differentiation model and a flexible specification of production costs, we show that the PO has an incentive to supply quality in excess of the socially optimal level. , Oxford University Press.
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Suggested Citation

  • Merel, Pierre R. & Sexton, Richard J., 2011. "Will Geographical Indications Supply Excessive Quality?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114651, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae11:114651
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    File URL: http://purl.umn.edu/114651
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    References listed on IDEAS

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    1. Sergio H. Lence & Stéphan Marette & Dermot J. Hayes & William Foster, 2007. "Collective Marketing Arrangements for Geographically Differentiated Agricultural Products: Welfare Impacts and Policy Implications," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 947-963.
    2. Pierre R. Mérel, 2008. "On the Deadweight Cost of Production Requirements for Geographically Differentiated Agricultural Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 642-655.
    3. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
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    Cited by:

    1. Koen Deconinck & Johan Swinnen, 2014. "The Political Economy of Geographical Indications," LICOS Discussion Papers 35814, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    2. repec:eee:wdevel:v:98:y:2017:i:c:p:58-67 is not listed on IDEAS
    3. Thijs Vandemoortele & Koen Deconinck, 2014. "When Are Private Standards More Stringent than Public Standards?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, pages 154-171.
    4. Olivier Bonroy & Christos Constantatos, 2015. "On the Economics of Labels: How Their Introduction Affects the Functioning of Markets and the Welfare of All Participants," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 239-259.
    5. repec:eee:wdevel:v:98:y:2017:i:c:p:1-11 is not listed on IDEAS
    6. 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, pages 79-111.
    7. repec:gbl:wpaper:2013-01 is not listed on IDEAS

    More about this item

    Keywords

    Consumer/Household Economics; Marketing;

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