How Big is the “Lemons” Problem? Historical Evidence from French Wines

Pierre Mérel (), Ariel Ortiz-Bobea and Emmanuel Paroissien

No 302485, Working Papers from Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2)

Abstract: This paper provides empirical evidence of large welfare losses associated with asymmetric information about product quality in a competitive market. When consumers cannot observe product characteristics at the time of purchase, atomistic producers have no incentive to supply costly quality. We compare wine prices across administrative districts around the enactment of historic regulations aimed at certifying the quality of more than 250 French appellation wines to identify welfare losses from asymmetric information. We estimate that these losses represent up to 13% of total market value, suggesting an important role for credible certification schemes.

Keywords: Crop Production/Industries; Food Consumption/Nutrition/Food Safety (search for similar items in EconPapers)
Pages: 53
Date: 2020
New Economics Papers: this item is included in nep-agr and nep-com
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://ageconsearch.umn.edu/record/302485/files/WP20-05.pdf (application/pdf)

Related works:
Journal Article: How big is the “lemons” problem? Historical evidence from French wines (2021)
Working Paper: How Big is the “Lemons” Problem? Historical Evidence from French Wines (2021)
Working Paper: How big is the “lemons” problem? Historical evidence from French wines (2021)
Working Paper: How Big is the “Lemons” Problem? Historical Evidence from French Wines (2020)
Working Paper: How Big is the “Lemons” Problem? Historical Evidence from French Wines (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:inrasl:302485

DOI: 10.22004/ag.econ.302485

Access Statistics for this paper

More papers in Working Papers from Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().