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Quality Certification by Geographical Indications, Trademarks and Firm Reputation

Luisa Menapace and GianCarlo Moschini ()

No 61778, 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado from Agricultural and Applied Economics Association

Abstract: We study firm reputation as a mechanism to assure product quality in perfectly competitive markets in a context in which both certification and trademarks are available. Shapiro’s (1983) model of reputation is extended to reflect both collective and firm-specific reputations, and this framework is used to study certification and trademarks for food products with a regional identity, known as geographical indications (GIs). Our model yields two primary results. First, in markets with asymmetric information and moral hazard problems, credible certification schemes reduce the cost of establishing reputation and lead to welfare gains compared to a situation in which only private trademarks are available. Hence, certification improves the ability of reputation to operate as a mechanism for assuring quality. Second, the actual design of the certification scheme plays an important role in mitigating informational problems. From a policy perspective, our results have implications for the current debate and negotiations on GIs at the World Trade Organization and the ongoing product quality policy reform within the European Union. With regard to the instrument of choice to provide intellectual property protection for GIs, our model favors a sui generis scheme based on appellations over certification marks. Finally, our model supports the validity of the traditional specialities guaranteed scheme of the European Union as an instrument for the provision of high-quality products that are not linked to a geographic area.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 44
Date: 2010
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Related works:
Journal Article: Quality certification by geographical indications, trademarks and firm reputation (2012) Downloads
Working Paper: Quality certification by geographical indications, trademarks and firm reputation (2012) Downloads
Working Paper: Quality certification by geographical indications, trademarks and firm reputation (2010) Downloads
Working Paper: Quality Certification by Geographical Indications, Trademarks and Firm Reputation (2009) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea10:61778

DOI: 10.22004/ag.econ.61778

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