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Labeling Policies in Food Markets: Private Incentives, Public Intervention, and Welfare Effects

Angelo Zago and Daniel Pick ()

Journal of Agricultural and Resource Economics, 2004, vol. 29, issue 01

Abstract: This study considers the welfare impact of labeling policies of agricultural commodities with specific characteristics. Using a model of vertical differentiation, the effects on equilibrium and welfare levels are calculated. The introduction of the regulation and the emergence of two differentiated competitive markets leaves consumers and high-quality producers better off, while low-quality producers are worse off. With high costs and low quality differences, the total welfare impact of the regulation can be negative. Findings show that when high-quality producers can exercise market power, the regulation could be more easily accepted by producers, but it would have a negative effect on consumers.

Keywords: asymmetric information; food markets; labeling; market power; vertical differentiation; welfare effects; Agricultural and Food Policy (search for similar items in EconPapers)
Date: 2004
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