A Game Theoretic Approach to Organic Foods: An Analysis of Asymmetric Information and Policy

Jill McCluskey

Agricultural and Resource Economics Review, 2000, vol. 29, issue 1, 1-9

Abstract: Demand for healthy, safe, and environmentally friendly food products has been increasing. In response, producers are marketing organic and other quality-differentiated foods, sometimes claiming to have followed sound environmental and animal welfare practices. These products frequently have unobservable quality attributes. If the profit-maximizing producer is able to deceive the consumer with a false claim, then he or she will enjoy a higher price with lower production costs (compared to the full disclosure outcome). The analysis described in this paper shows that repeat-purchase relationships and third-party monitoring are required for high-quality credence goods to be available. Policy implications of this analysis for national organic food standards are discussed.

Date: 2000
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Journal Article: A GAME THEORETIC APPROACH TO ORGANIC FOODS: AN ANALYSIS OF ASYMMETRIC INFORMATION AND POLICY (2000)
Working Paper: A Game Theoretic Approach to Organic Foods: An Analysis of Asymmetric Information and Policy (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:cup:agrerw:v:29:y:2000:i:01:p:1-9_00

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