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Geographical Indications and the Competitive Provision of Quality in Agricultural Markets

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

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.

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File URL: http://www.econ.iastate.edu/sites/default/files/publications/papers/paper_12858.pdf
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12858.

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Date of creation: 04 Jan 2008
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Publication status: Published in American Journal of Agricultural Economics 2008, vol. 90, pp. 794-812
Handle: RePEc:isu:genres:12858
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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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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