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Influence of voluntary GMO-free production standards on the reputation and flexibility of agricultural value chains

Author

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  • Venus, Thomas
  • Punt, Maarten
  • Wesseler, Justus

Abstract

We analyze dairies’ decisions to invest in voluntary GMO-free certification. Using a real-option model, we find the maximum precautionary investment in a single-firm setting. The model is extended to a non-cooperative game framework where dairies’ decisions are linked by their reputation gains and losses from investing and waiting, respectively. We show two main results: (1) smaller firms are more likely to invest; (2) both small and large firms may be worse off when it is optimal for both firm types to invest.

Suggested Citation

  • Venus, Thomas & Punt, Maarten & Wesseler, Justus, 2015. "Influence of voluntary GMO-free production standards on the reputation and flexibility of agricultural value chains," 2015 Conference, August 9-14, 2015, Milan, Italy 211920, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae15:211920
    DOI: 10.22004/ag.econ.211920
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    References listed on IDEAS

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