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Journal of Agricultural & Food Industrial Organization

Ed. by Azzam, Azzeddine

1 Issue per year

Labeling Policies and Market Behavior: Quality Standard and Voluntary Label Adoption

Lucie Bottega1 / Philippe Delacote2 / Lisette Ibanez3

1EQUIPPE - LILLE 3 Université Charles-de-Gaulle - Lille 3

2INRA, Agroparistech, Engref, Laboratoire d’économie forestière

3INRA, UMR 1135 LAMETA; NRA, UMR 356 Économie Forestière

Citation Information: Journal of Agricultural & Food Industrial Organization. Volume 7, Issue 2, ISSN (Online) 1542-0485, DOI: 10.2202/1542-0485.1273, December 2009

Publication History:
Published Online:
2009-12-04

This paper focus's on the third-party certifiers' strategy when choosing a required label quality, and the consequent market outcome. We consider two different objectives of the certifier: maximizing global demand for the labeled product (wide public policy), or maximizing global quality of the market (global quality policy). In a duopoly set up with firms bearing different costs with respect to quality provision, firms always opt for differentiation strategies: only one adopts the label. However, the labeling firm is not necessarily the most efficient one. In the case of a wide public policy, the efficient firm will produce labeled products only if costs of labeling are sufficiently low. In the case of a global quality policy, the low cost firm will always push the high-cost firm into the labeling program.

Keywords: labeling; product quality; Bertrand duopoly

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