IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

The Strategic Use of Private Quality Standards in Food Supply Chains

  • Vanessa von Schlippenbach
  • Isabel Teichmann

This paper highlights the strategic role that private quality standards play in food supply chains. Considering two symmetric retailers that are exclusively supplied by a finite number of producers and endogenizing the producers' delivery choice, we show that there exist two asymmetric equilibria in the retailers' quality requirements. The asymmetry is driven by both the retailers.incentive to raise their buyer power and the retailers' competition for suppliers. We find that the use of private quality standards is detrimental to social welfare. A public minimum quality standard can remedy this unfavorable welfare outcome.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.372357.de/dp1120.pdf
Download Restriction: no

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 1120.

as
in new window

Length: 29 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diwwpp:dp1120
Contact details of provider: Postal: Mohrenstraße 58, D-10117 Berlin
Phone: xx49-30-89789-0
Fax: xx49-30-89789-200
Web page: http://www.diw.de/en
Email:


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.:

as in new window
  1. Marie-Laure Allain, 1999. "The Balance of Power Between Producers and Retailers : A Differentiation Model," Working Papers 99-17, Centre de Recherche en Economie et Statistique.
  2. Stéphane Caprice, 2006. "Multilateral Vertical Contracting with an Alternative Supply: The Welfare Effects of a Ban on Price Discrimination," Review of Industrial Organization, Springer, vol. 28(1), pages 63-80, 02.
  3. Christopher Kanter & Kent D. Messer & Harry M. Kaiser, 2009. "Does Production Labeling Stigmatize Conventional Milk?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1097-1109.
  4. Céline Bonnet & Pierre Dubois, 2010. "Inference on vertical contracts between manufacturers and retailers allowing for nonlinear pricing and resale price maintenance," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 139-164.
  5. Thijs Vandemoortele & Koen Deconinck, 2013. "When are Private Standards more Stringent than Public Standards?," LICOS Discussion Papers 33313, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  6. Teichmann, Isabel & von Schlippenbach, Vanessa, 2011. "The Strategic Use of Private Quality Standards in Food Supply Chains," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 116079, European Association of Agricultural Economists.
  7. Inderst, Roman & Wey, Christian, 2007. "Buyer power and supplier incentives," European Economic Review, Elsevier, vol. 51(3), pages 647-667, April.
  8. Daniel P. O'Brien & Greg Shaffer, 1992. "Vertical Control with Bilateral Contracts," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 299-308, Autumn.
  9. Jill J. McCluskey & Jason A. Winfree, 2009. "Pre-empting public regulation with private food quality standards," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(4), pages 525-539, December.
  10. Crampes, C. & Hollander, A., 1992. "Duopoly and Quality Standards," Papers 92.g, Toulouse - GREMAQ.
  11. Pierpaolo Battigalli & Chiara Fumagalli & Michele Polo, 2006. "Buyer Power and Quality Improvement," Working Papers 310, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  12. McAfee, R. Preston & Schwartz, Marius, 1995. "The non-existence of pairwise-proof equilibrium," Economics Letters, Elsevier, vol. 49(3), pages 251-259, September.
  13. Scheffman, David T & Spiller, Pablo T, 1992. "Buyer's Strategies, Entry Barriers, and Competition," Economic Inquiry, Western Economic Association International, vol. 30(3), pages 418-36, July.
  14. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-77, November.
  15. Inderst, Roman & Wey, Christian, 2001. "Bargaining, Mergers and Technology Choice in Bilaterally Oligopolistic Industries," CEPR Discussion Papers 2981, C.E.P.R. Discussion Papers.
  16. Paul W. Dobson & Michael Waterson & Stephen W. Davies, 2003. "The Patterns and Implications of Increasing Concentration in European Food Retailing," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 111-125.
  17. Zhifeng Gao & Ted C. Schroeder, 2007. "Effects of Label Information on Consumer Willingness-to-Pay for Food Attributes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 795-809.
  18. Fernando Balsevich & Julio A. Berdegué & Luis Flores & Denise Mainville & Thomas Reardon, 2003. "Supermarkets and Produce Quality and Safety Standards in Latin America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1147-1154.
  19. Bokusheva, Raushan & Buchenrieder, Gertrud, 2006. "Contributions to the 4th young scientists workshop on agricultural development in Central and Eastern Europe," IAMO Discussion Papers 98, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
  20. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
  21. Lutz, Stefan & Lyon, Thomas P & Maxwell, John W, 2000. "Quality Leadership When Regulatory Standards Are Forthcoming," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 331-48, September.
  22. Éric Giraud-Héraud & Lamia Rouached & Louis-Georges Soler, 2006. "Private labels and public quality standards: How can consumer trust be restored after the mad cow crisis?," Quantitative Marketing and Economics, Springer, vol. 4(1), pages 31-55, March.
  23. Henrick Horn & Asher Wolinsky, 1988. "Bilateral Monopolies and Incentives for Merger," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 408-419, Autumn.
  24. Codron, Jean-Marie & Giraud-Heraud, Eric & Soler, Louis-Georges, 2005. "Minimum quality standards, premium private labels, and European meat and fresh produce retailing," Food Policy, Elsevier, vol. 30(3), pages 270-283, June.
  25. Gil, Jose Maria & Gracia, Azucena & Sanchez Garcia, Mercedes, 2000. "Market Segmentation And Willingness To Pay For Organic Products In Spain," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 3(02).
  26. Douadia Bougherara & Pierre Combris, 2009. "Eco-labelled food products: what are consumers paying for?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(3), pages 321-341, September.
  27. Marcoul, Philippe & Veyssiere, Luc, 2008. "A Financial Contracting Approach to the Role of Supermarkets in Farmers' Credit Access," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6366, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  28. Abdelhakim Hammoudi & Ruben Hoffmann & Yves Surry, 2009. "Food safety standards and agri-food supply chains: an introductory overview," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(4), pages 469-478, December.
  29. Villas-Boas, Sofia B., 2006. "Vertical relationships between manufacturers and retailers: inference with limited data," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0z26d2v9, Department of Agricultural & Resource Economics, UC Berkeley.
  30. Claire Chambolle & Sofia Villas-Boas, 2007. "Buyer Power through Producer's Differentiation," Working Papers hal-00243058, HAL.
  31. Frank VAN TONGEREN & Marie-Luise RAU, . "Heterogeneous Firms and Homogenising Standards in Agri-Food Trade - the Polish Meat Case," EcoMod2008 23800149, EcoMod.
  32. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
  33. David Boselie & Spencer Henson & Dave Weatherspoon, 2003. "Supermarket Procurement Practices in Developing Countries: Redefining the Roles of the Public and Private Sectors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1155-1161.
  34. Inderst, Roman & Shaffer, Greg, 2004. "Retail Mergers: Buyer Power and Product Variety," CEPR Discussion Papers 4236, C.E.P.R. Discussion Papers.
  35. Garcia Martinez, Marian & Poole, Nigel, 2004. "The development of private fresh produce safety standards: implications for developing Mediterranean exporting countries," Food Policy, Elsevier, vol. 29(3), pages 229-255, June.
  36. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  37. Bazoche Pascale & Giraud-Héraud Eric & Soler Louis-Georges, 2005. "Premium Private Labels, Supply Contracts, Market Segmentation, and Spot Prices," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(1), pages 1-30, February.
  38. Zhiqi Chen, 2004. "Monopoly and Product Diversity: The Role of Retailer Countervailing Power," Carleton Economic Papers 04-19, Carleton University, Department of Economics.
  39. Kathleen Brooks & Jayson L. Lusk, 2010. "Stated and Revealed Preferences for Organic and Cloned Milk: Combining Choice Experiment and Scanner Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(4), pages 1229-1241.
  40. Valletti, Tommaso M, 2000. "Minimum Quality Standards under Cournot Competition," Journal of Regulatory Economics, Springer, vol. 18(3), pages 235-45, November.
  41. McAfee, R Preston & Schwartz, Marius, 1994. "Opportunism in Multilateral Vertical Contracting: Nondiscrimination, Exclusivity, and Uniformity," American Economic Review, American Economic Association, vol. 84(1), pages 210-30, March.
  42. John C. Bernard & Daria J. Bernard, 2007. "What Is It About Organic Milk? An Experimental Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 826-836.
  43. Uri Ronnen, 1991. "Minimum Quality Standards, Fixed Costs, and Competition," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 490-504, Winter.
  44. Carlos D. Mayen & Joseph V. Balagtas & Corinne E. Alexander, 2010. "Technology Adoption and Technical Efficiency: Organic and Conventional Dairy Farms in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 181-195.
  45. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 113-31, June.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp1120. 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: (Bibliothek)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.