Influence of voluntary GMO-free production standards on the reputation and flexibility of agricultural value chains

Thomas Venus (thomas.venus@lfl.bayern.de), Maarten Punt and Justus Wesseler

No 211920, 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists

Abstract: We analyze dairies’ decisions to invest in voluntary GMO-free certification. Using a real-option model, we find the maximum precautionary investment in a single-firm setting. The model is extended to a non-cooperative game framework where dairies’ decisions are linked by their reputation gains and losses from investing and waiting, respectively. We show two main results: (1) smaller firms are more likely to invest; (2) both small and large firms may be worse off when it is optimal for both firm types to invest.

Keywords: Agribusiness; Crop Production/Industries; Livestock Production/Industries (search for similar items in EconPapers)
Pages: 18
Date: 2015
New Economics Papers: this item is included in nep-bec
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae15:211920

DOI: 10.22004/ag.econ.211920

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