Reputation, Quality Observability, and the Choice of Quality Assurance Systems
Participants in a supply chain of agricultural value-added products face significant challenges. Many of the costly distinctive traits desired by consumers are difficult (if not impossible) to observe even after consumption. A complicating factor, addressed here, is that in some circumstances delivered quality can only be imperfectly learned and/or affected stochastically by producers. Hence, both symmetric and asymmetric informational imperfections may be present. In order for markets for these classes of goods to arise, firms touting the quality of the product need to be trusted. 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, attractiveness of a market, 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 in an environment of symmetrically imperfect information.
|Date of creation:||Sep 2004|
|Contact details of provider:|| Postal: 578 Heady Hall, Ames, Iowa 50011-1070|
Phone: (515) 294-1183
Fax: (515) 294-6336
Web page: https://www.card.iastate.edu/
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.:
- Reardon, Thomas & Farina, Elizabeth Maria Mercier Querido, 2001. "The Rise Of Private Food Quality And Safety Standards: Illustrations From Brazil," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 4(04).