PUBLIC REGULATION AS A SUBSTITUTE FOR TRUST IN QUALITY FOOD MARKETS. WHAT IF THE TRUST SUBSTITUTE CANNOT BE FULLY TRUSTED?

Giovanni Anania () and Rosanna Nistico

No 25924, 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa from International Association of Agricultural Economists

Abstract: Most food products can be classified as "credence" goods and regulations exist to provide consumers with a substitute for the lacking information and trust. The paper presents an analysis of the decisions of producers and consumers about a "credence" good in three institutional scenarios, which reflect different levels of credibility of the regulation. The first scenario is a reference scenario in which the regulation is fully credible. In the second case considered there is no regulation, or, if there is, it is totally ineffective. In the third scenario a regulation only partially credible provides consumers with an imperfect substitute for the information and trust they lack. Some of the producers of "low" quality goods share with the producers of "high" quality goods an interest in the introduction of a regulation as long as this is not fully credible. In addition, it may be the case that even producers of "low" quality goods who know they will not be able to sell their products labeling them as being of "high" quality may have an interest in supporting a not fully credible regulation. Finally, rather than having producers of "low" quality goods "block" the introduction of a fully credible regulation, producers of "high" quality goods are better off when a compromise is reached which leads to the approval of an imperfect regulation.

Keywords: Food; Consumption/Nutrition/Food; Safety (search for similar items in EconPapers)
Pages: 26
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Public Regulation as a Substitute for Trust in Quality Food Markets: What if the Trust Substitute cannot be Fully Trusted? (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae03:25924

DOI: 10.22004/ag.econ.25924

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