Are geographical indications a worthy quality label? A framework with endogenous quality choice
We analyze the effects of Geographical Indication (GI) labeling on quality choices and welfare with two vertically differentiated goods, one labelable, the other not. We consider two attributes of these goods: gustatory quality and geographical origin. We investigate two extreme cases of the Protected Designation of Origin (PDO) label: a denomination standard, which guarantees only the origin of the product, without any requirement on production specifications; and a minimum quality requirement, which guarantees both the origin and the quality of the product. We find that the PDO good is not necessarily the high-quality good. When it is, the introduction of the denomination standard causes its quality to decrease. Binding production specifications that maintain the quality level of the labeled good adversely affect the PDO firm.
|Date of creation:||Dec 2011|
|Date of revision:||Jun 2012|
|Publication status:||Published in European Review of Agricultural Economics, 2014.|
|Contact details of provider:|| Phone: (+33) 5 61 12 86 23|
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"The role of common labelling in a context of asymmetric information,"
162423, Institut National de la Recherche Agronomique, France.
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Cahiers de recherche
9225, Universite de Montreal, Departement de sciences economiques.
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