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

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

Participants in a supply chain of agricultural value-added products face significant challenges. Many of the costly distinctive traits 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. In order for markets for these goods to arise, firms touting the quality of the product need to be trusted. In response to these challenges, new (and diverse) quality assurance systems (QASs) that facilitate the acquisition and flow of information about agricultural and food products are being put in place. A repeated-purchases model is developed to explore the fundamental economic factors that lie behind the choice of different QASs 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.

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.card.iastate.edu/publications/DBS/PDFFiles/04wp377.pdf
File Function: Full Text
Download Restriction: no

File URL: http://www.card.iastate.edu/publications/synopsis.aspx?id=558
File Function: Online Synopsis
Download Restriction: no

Paper provided by Center for Agricultural and Rural Development (CARD) at Iowa State University in its series Center for Agricultural and Rural Development (CARD) Publications with number 04-wp377.

as
in new window

Length:
Date of creation: Nov 2004
Date of revision:
Handle: RePEc:ias:cpaper:04-wp377
Contact details of provider: Postal: 578 Heady Hall, Ames, Iowa 50011-1070
Phone: (515) 294-1183
Fax: (515) 294-6336
Web page: http://www.card.iastate.edu/
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. Unnevehr, Laurian J. & Jensen, Helen H., 1996. "HACCP As a Regulatory Innovation to Improve Food Safety in the Meat Industry," Staff General Research Papers 937, Iowa State University, Department of Economics.
  2. John M. Antle, 1996. "Efficient Food Safety Regulation in the Food Manufacturing Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1242-1247.
  3. Hennessy, David A. & Roosen, Jutta & Jensen, Helen H., 2003. "Systemic failure in the provision of safe food," Food Policy, Elsevier, vol. 28(1), pages 77-96, February.
  4. Julie A. Caswell & Eliza M. Mojduszka, 1996. "Using Informational Labeling to Influence the Market for Quality in Food Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1248-1253.
  5. Rafael Rob & Tadashi Sekiguchi, 2001. "Product Quality, Reputation and Turnover," Penn CARESS Working Papers 95ec48d1c0f2065e1d4aaeb99, Penn Economics Department.
  6. Mason, Charles F & Sterbenz, Frederic P, 1994. "Imperfect Product Testing and Market Size," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 61-86, February.
  7. Noelke, Corinna M. & Caswell, Julie A., 2000. "A Model Of The Implementation Of Quality Management Systems For Credence Attributes," 2000 Annual meeting, July 30-August 2, Tampa, FL 21874, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Dixit, Avinash K, 1986. "Comparative Statics for Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-22, February.
  9. Hennessy, David A., 1996. "Information Asymmetry As a Reason for Food Industry Vertical Integration," Staff General Research Papers 5032, Iowa State University, Department of Economics.
  10. Chalfant, James A. & James, Jennifer S. & Lavoie, Nathalie & Sexton, Richard J., 1999. "Asymmetric Grading Error And Adverse Selection: Lemons In The California Prune Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(01), July.
  11. Hennessy, David A. & Roosen, Jutta & Miranowski, John, 2001. "Leadership and the Provision of Safe Food," Staff General Research Papers 10549, Iowa State University, Department of Economics.
  12. 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 (IAMA), vol. 4(04).
  13. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
  14. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
  15. Shapiro, Carl, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, MIT Press, vol. 98(4), pages 659-79, November.
  16. De, Sankar & Nabar, Prafulla, 1991. "Economic implications of imperfect quality certification," Economics Letters, Elsevier, vol. 37(4), pages 333-337, December.
  17. Fearne, Andrew & Hornibrook, Susan A. & Dedman, Sandra, 2001. "The Management Of Perceived Risk In The Food Supply Chain: A Comparative Study Of Retailer-Led Beef Quality Assurance Schemes In Germany And Italy," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 4(01).
  18. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-41, August.
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:ias:cpaper:04-wp377. 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: ()

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.