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

Jill McCluskey ()

No 123706, 2000 Conference (44th), January 23-25, 2000, Sydney, Australia from Australian Agricultural and Resource Economics Society

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 profitmaximizing 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.

Keywords: Agricultural and Food Policy; Food Consumption/Nutrition/Food Safety (search for similar items in EconPapers)
Date: 1999-07-29
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http://ageconsearch.umn.edu/record/123706/files/McCluskey.pdf (application/pdf)

Related works:
Journal Article: A GAME THEORETIC APPROACH TO ORGANIC FOODS: AN ANALYSIS OF ASYMMETRIC INFORMATION AND POLICY (2000) Downloads
Journal Article: A Game Theoretic Approach to Organic Foods: An Analysis of Asymmetric Information and Policy (2000) Downloads
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