Food quality in domestic markets of developing economies:A comparative study of two countries
Food quality has become an important determinant of success in global food trade and growers for international markets have to continuously adjust to buyersâ€™ requirements. It is however not clear to what extent there is a demand for food quality - and how much buyers are willing to pay for it - in domestic food markets of developing economies. Based on unique comparable price and trader data in a poor country in Africa (Madagascar) and an emerging economy in Asia (India), we compare food quality and qualityâ€™s pricing. We find significantly better quality and higher quality premiums (using revealed as well as stated preference methods) in India than in Madagascar. We explain these observed differences through a simple theoretical model, solely based on large average income gaps between the two countries.
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