Explaining the Emergence of Private Standards in Food Supply Chains

Eric Giraud-Héraud, Cristina Grazia and Abdelhakim Hammoudi
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Eric Giraud-Héraud: X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris, INRA - Institut National de la Recherche Agronomique
Cristina Grazia: Agricultural Economics and Engineering Department - UNIBO - Alma Mater Studiorum Università di Bologna = University of Bologna

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Abstract: This paper provides an original theoretical framework to better understand the raise of private standards in agrifood chains. Reasons for the emergence and conditions for the effectiveness of private standards are identified, by investigating retailers' strategic behaviour and, more precisely, both interactions among retailers and upstream producers and the role of consumer behaviour vis-àvis the food safety risk. We show that a relatively strict Minimum Quality Standard (MQS) may incentive the retailer to develop an even more demanding private standard, when market-driven incentive is relatively high; this result crucially depends on consumer risk misperception. Setting a private standard may improve market access for upstream producers. In addition, it may reduce food safety risk and, at the same time, improve consumer surplus.

Keywords: Private standards; vertical relationships; risk misperception (search for similar items in EconPapers)
Date: 2012-11-07
New Economics Papers: this item is included in nep-agr
Note: View the original document on HAL open archive server: https://hal.science/hal-00749345v1
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Citations: View citations in EconPapers (1)

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