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Geographical Indications and the Competitive Provision of Quality in Agricultural Markets

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  • Moschini, GianCarlo
  • Menapace, Luisa
  • Pick, Daniel

Abstract

The economics of geographical indications (GIs) is assessed within a vertical product differentiation framework that is consistent with the competitive structure of the agricultural sector with free entry/exit. It is assumed that certification costs are needed for GIs to serve as (collective) credible quality certification devices, and production of high-quality product is endogenously determined. We find that GIs can support a competitive provision of quality that partly overcomes the market failure and leads to clear welfare gains, although they fall short of delivering the (constrained) first-best level of the high-quality good. The main beneficiaries of the welfare gains are consumers. Producers may also accrue some benefit if the production of high-quality products draws on scarce factors that they own.

Suggested Citation

  • Moschini, GianCarlo & Menapace, Luisa & Pick, Daniel, 2008. "Geographical Indications and the Competitive Provision of Quality in Agricultural Markets," Staff General Research Papers Archive 12858, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:12858
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    References listed on IDEAS

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    1. Zago, Angelo M. & Pick, Daniel H., 2004. "Labeling Policies in Food Markets: Private Incentives, Public Intervention, and Welfare Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(01), April.
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    Keywords

    geographical indications; quality certification; Welfare; competitive industry; free entry/exit; Marshallian stability; trademarks;

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