Article thumbnail

Reputations, Market Structure, and the Choice of Quality Assurance Systems in the Food Industry

By Miguel A. Carriquiry and Bruce A. Babcock


A repeated-purchases model is developed to explore the fundamental economic factors that lie behind the choice of different quality assurance systems and their associated degrees of stringency by firms. Differences in the quality discoverability of a sought-after attribute, market structure, attractiveness of a market, nature of reputations, and the value placed in the future are among the factors contributing to the implementation of widely diverse systems across participants in different markets. Close attention is paid to the role of reputations in providing the incentives for firms to deliver high-quality goods. We model three different scenarios - monopoly, duopoly with firm-specific reputations, and duopoly with industry-wide reputations - and compare the resulting welfare of processors and their customers. We also provide a rationale for the branding efforts of many firms to distinguish their products along the supply chain.quality assurance, reputations, repeated purchases, product quality, supply chain, value-added agriculture, imperfect information, Marketing,

OAI identifier:
Downloaded from

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.

Suggested articles


  1. (2000). A Model of the Implementation of Quality Management Systems for Credence Attributes.” Paper presented at the American Agricultural Economics Association Annual Meeting,
  2. (1989). Applied Production Analysis: A Dual Approach. New York:
  3. (1999). Asymmetric Grading Error and Adverse Selection: Lemons in the California Prune Industry.”
  4. (1986). Comparative Statics for Oligopoly.”
  5. (2001). Economic Analysis of Food Safety.”
  6. (1996). Efficient Food Safety Regulation in the Food Manufacturing Sector.”
  7. (1996). HACCP as a Regulatory Innovation to Improve Food Safety in the Meat Industry.”
  8. (1996). Information Assymmetry as a Reason for Food Industry Vertical Integration.”
  9. (2001). Leadership and the Provision of Safe Food.”
  10. (1985). Multimarket Oligopoly: Strategic Substitutes and
  11. (1983). Premiums for High Quality Products and Returns to Reputations.”
  12. (2001). Product Quality, Reputation and Turnover.” Working Paper.
  13. (2002). Quality and Grading Risk.” Chap. 16 in A Comprehensive Assessment of the Role of Risk
  14. (2000). Recursive Macroeconomic Theory.
  15. (1997). Satisfaction: A Behavioral Perspective on the Consumer.
  16. (2001). The Management of Perceived Risk in the Food Supply Chain: A Comparative Study
  17. (2001). Using Farm Assurance Schemes to Signal Safety to Multiple Retailers in
  18. (1996). Using Informational Labeling to Influence the Market for Quality in Food Products.”