Behaviors in the market for safe vegetables under information asymmetry: modeling approach

Hoi Quoc Le () and Thi Minh Nguyen ()
Additional contact information
Hoi Quoc Le: National Economics University
Thi Minh Nguyen: National Economics University
Authors registered in the RePEc Author Service: Nguyễn Thị Minh

Eurasian Economic Review, 2018, vol. 8, issue 3, No 3, 392 pages

Abstract: Abstract The paper proposes a theoretical model that depicts a shop owner’s behavior in the market for safe vegetables under informational asymmetry between sellers and buyers. In the model, the shop owner claims his shop provides safe vegetables and is maximizing profit by mixing ordinary vegetables with safe vegetables. The buyers make their decision about buying or not buying vegetables from the shop based on their own belief in the information supplied by the sellers. The results from numerical studies show that low credibility leads to limited efficiency of inspection activities. Raising credibility can make the whole society better off, including the sellers as well as the buyers. In addition, the ratio of safe vegetables as well as the total sale of genuinely safe vegetables will also increase. Hence, the paper calls for a trustworthy inspection system so that consumers can have higher trust in the credibility of the information they receive.

Keywords: Safe vegetable market; Asymmetry information; Modelling (search for similar items in EconPapers)
JEL-codes: C02 D18 Q18 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s40822-018-0093-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
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:spr:eurase:v:8:y:2018:i:3:d:10.1007_s40822-018-0093-5

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40822

DOI: 10.1007/s40822-018-0093-5

Access Statistics for this article

Eurasian Economic Review is currently edited by Dorothea Schäfer

More articles in Eurasian Economic Review from Springer, Eurasia Business and Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().