Producer's choice of certification

Corinne Langinier and Bruce Babcock

No 19510, 2005 Annual meeting, July 24-27, Providence, RI from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: Consumers are in general less informed than producers about the quality of agricultural goods. To reduce the information gap, consumers can rely on standards (labels, certifications, geographic indications) that insure quality and origin of the goods. However, these standards do not always fully reveal information. Some of them may just signal that the good is more likely to be of high quality. We investigate what kind of standards are most desirable for producers, and for society in general knowing that any system is costly to implement. One of our findings is that for intermediate values of certification costs, certification that fully reveals information makes high quality producers better off, but make the entire industry worse off. In this case, the benefit from the revelation of the quality does not outweigh certification costs and the loss incurred by low quality producers. Furthermore, the industry may be better off under partial revelation of information rather than full revelation for some values of the certification costs.

Keywords: Consumer/Household; Economics (search for similar items in EconPapers)
Pages: 22
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea05:19510

DOI: 10.22004/ag.econ.19510

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