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

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  • Carriquiry, Miguel A.
  • Babcock, Bruce A.

Abstract

Many food traits desired by consumers are costly to provide and difficult to verify. A complicating factor is that delivered quality can only be affected stochastically by producers and imperfectly observed by consumers. Markets for these goods will emerge only if supplying firms can be trusted. We develop a repeated purchases model to explore how quality discoverability, market structure, nature of reputations, market premiums, and discount factors drive firm choice about the stringency of quality assurance systems designed to gain consumer trust. Reputation protection is key incentive for firms to invest in high-quality goods and quality assurance systems.

Suggested Citation

  • Carriquiry, Miguel A. & Babcock, Bruce A., 2004. "Reputations, Market Structure, and the Choice of Quality Assurance Systems in the Food Industry," Staff General Research Papers Archive 12215, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:12215
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    References listed on IDEAS

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    1. repec:kap:ijhcfe:v:17:y:2017:i:2:d:10.1007_s10754-016-9208-2 is not listed on IDEAS
    2. Rouviere, Elodie & Soubeyran, Raphael, 2008. "Collective Reputation, Entry and Minimum Quality Standard," Economic Theory and Applications Working Papers 6325, Fondazione Eni Enrico Mattei (FEEM).
    3. Minten, Bart & Singh, K.M. & Sutradhar, Rajib, 2013. "Branding and agricultural value chains in developing countries: Insights from Bihar (India)," Food Policy, Elsevier, vol. 38(C), pages 23-34.
    4. Minten, Bart & Singh, K.M. & Sutradhar, Rajib, 2010. "The makhana value chain and the fast emergence of branding in food retail: Evidence from Bihar (India)," MPRA Paper 54344, University Library of Munich, Germany, revised 14 Jan 2010.
    5. Gelaw, Fekadu & Speelman, Stijn & Van Huylenbroeck, Guido, 2016. "Farmers’ marketing preferences in local coffee markets: Evidence from a choice experiment in Ethiopia," Food Policy, Elsevier, vol. 61(C), pages 92-102.
    6. Rouviere, Elodie & Soubeyran, Raphael, 2008. "Collective Reputation, Entry and Minimum Safety Standard," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44465, European Association of Agricultural Economists.
    7. Bontemps, Christophe & Bouamra-Mechemache, Zohra & Simioni, Michel, 2012. "Quality Labels and Firm Survival in the French Cheese Industry," TSE Working Papers 12-335, Toulouse School of Economics (TSE).
    8. Minten, Bart & Assefa, Thomas & Hirvonen, Kalle, 2017. "Can Agricultural Traders be Trusted? Evidence from Coffee in Ethiopia," World Development, Elsevier, vol. 90(C), pages 77-88.
    9. 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, vol. 43(1), pages 79-111.
    10. Baniak Andrzej & Grajzl Peter, 2013. "Equilibrium and Welfare in a Model of Torts with Industry Reputation Effects," Review of Law & Economics, De Gruyter, vol. 9(2), pages 265-302, October.
    11. repec:eee:jfpoli:v:74:y:2018:i:c:p:23-38 is not listed on IDEAS
    12. Minten, Bart & Singh, K.M. & Sutradhar, Rajib, 2011. "Branding in food retail of high value crops in Asia: Case of Makhana from Bihar (India)," MPRA Paper 54334, University Library of Munich, Germany, revised 31 Jan 2011.
    13. Minten, Bart & Singh, K.M. & Sutradhar, Rajib, 2011. "The rapid emergence of branding in food retail in Asia: Insights from Bihar (India)," MPRA Paper 54337, University Library of Munich, Germany, revised 14 Jan 2011.
    14. Rat-Aspert, Olivier & Weldegebriel, Habtu T. & Stott, Alistair W. & Fourichon, C., 2008. "Managing animal health status information in the cattle market," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44064, European Association of Agricultural Economists.

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