THE WELFARE CONSEQUENCES OF CERTIFIED LABELING FOR CREDENCE ATTRIBUTES

Certified labeling for credence attributes is examined using the concepts of pooled and separating equilibria. The analysis addresses a latent credence good demand that differs from a conventional good demand by willingness to pay for the credence characteristic. Third-party certified labeling vertically differentiates the two products and a two separate markets replace a single pooled market. Market outcomes are examined theoretically and with empirical simulations. Costless labeling is net welfare improving, but impacts are highly asymmetric. Credence producers gain largely at the expense of conventional producers. Costly labeling may reduce welfare even with rather modest labeling costs.Marketing,

PUBLIC OPINIONS ABOUT FARMLAND AND FARMLAND PRESERVATION: RESULTS FROM A SURVEY IN KENT COUNTY, MICHIGAN

Retention of agricultural land has become a principal goal for Michigan and its local governments. Purchase of Development Rights is one farmland preservation policy option being considered by many local units of government. Maximizing the benefits from such a program requires an understanding of why the public is interested in farmland preservation. The type and magnitude of benefit will differ depending upon which land is targeted for preservation. This paper reports the results of a survey conducted to ask residents of Kent County, Michigan, what characteristics of farmland are important and how farmland preservation programs should be targeted. The survey also asked whether respondents would support farmland preservation. Results indicate that characteristics of farmland do matter and that support of a farmland preservation program is likely driven by program cost.Land Economics/Use,

UNDERSTANDING THE DEMAND FOR FARMLAND PRESERVATION: IMPLICATIONS FOR MICHIGAN POLICIES

The diversity of opinion on farmland preservation suggests that a close look at the issue is warranted as state and local governments consider how best to preserve the state's farmland resource. Public support for farmland preservation programs will be required if those programs are to be successful and will only be forthcoming if there is greater agreement about questions that underlie the policy debate. These questions include whether farmland loss is occurring, whether farmland preservation is needed, how farmland preservation programs should be designed, and what farmland should be preserved. This paper discusses each of these issues, in turn, and describes how current Michigan farmland preservation efforts are or are not addressing them.Land Economics/Use,

FACTORS INFLUENCING SUPPORT FOR RURAL LAND USE CONTROL : A COMMENT

Land ownership characteristics such as the quantity of land owned, quality of land parcels, and location of land describe important dimensions of landed wealth. Landed wealth is expected to be an important factor influencing support for rural land use control. This factor was not discussed in the April (1999) article by McLeod, Woirhaye, and Menkhaus (1999). We suggest that this factor contributes to understanding variation in support for rural land use control.Land Economics/Use,

INFORMATION AS A DOUBLE-EDGE SWORD: IMPLICATIONS FOR FOOD STANDARDS AND LABELS

An analytical model is developed to examine product quality labeling. Prior to labeling all consumers are willing to pay a premium for the quality characteristic but product quality cannot be observed directly. If production costs are increasing, the total quantity produced may contain a mix of products - with and without the high-valued attribute. In the pooled equilibrium demand is influenced by perceptions of the product mix. After labels are introduced the market is separated into two sectors, conventional and high-valued. The economic implications of labels are examined by contrasting welfare in the separating equilibrium with welfare in the pooled equilibrium. Under the models' maintained assumptions the conventional sector loses welfare, while producers of the high-valued product experience gains. In addition, producers of the high-valued product may have incentives to promote costly labeling despite net-welfare losses.Marketing,

INFORMATION AS A DOUBLE-EDGED SWORD: THE ECONOMIC AND WELFARE CONSEQUENCES OF CERTIFIED LABELING FOR CREDENCE ATTRIBUTES

Certified labeling for credence attributes is examined using the concepts of pooled and separating equilibria. Credence attributes are product features that cannot be experienced directly by consumer, features such as pesticide-free, dolphin-safe, hormone-free, and organic. Without labeling, the traded good is a mix of credence and conventional goods. With certified labeling, the pooled market is replaced with separate markets for the credence and conventional good. Market outcomes are examined theoretically and with empirical simulations. Costless labeling is net welfare improving, but impacts are highly asymmetric. Credence producers gain largely at the expense of conventional producers. Costly labeling may reduce welfare even with rather modest labeling costs.Marketing,

THE EFFECT OF HAZARDOUS WASTE SITES ON PROPERTY VALUES IN ZONES OF HIGH INDUSTRIAL ACTIVITY: A HEDONIC APPROACH

Hedonic pricing methods typically employ a distance-to-site variable to measure variation in exposure to environmental disamenities. Some environmental disamenities, like hazardous waste sites, may be spatially correlated with another prominent feature of the urban plain zones of industrial activity. In these cases, failure to account for industrial activity is hypothesized to bias coefficient estimates of the distance-to-site measure. The data set includes a distance-to-site measure as well as a distance-to-industrial measure. These measures allow for empirical estimations of the hedonic price function that distinguish the property value effect associated with exposure to hazard from the property value effect associated with industrial activity. The results suggest that failure to account for industrial activity will overstate the effect of hazardous waste sites on property values and inflate benefit estimates associated with hazardous waste clean-up. Key words: Superfund, Spatial Correlates, Industrial Activity, Hedonic Price FunctionSuperfund, Spatial Correlates, Industrial Activity, Hedonic Price Function, Environmental Economics and Policy, Land Economics/Use,

Setting the Standard for Farmland Preservation: Do Preservation Criteria Motivate Citizen Support for Farmland Preservation?

The multifunctional set of services provided by farmland complicates the task of identifying which farmland should be preserved. For this reason many states and local governments establish criteria to rank and select parcels of farmland for protection. This study examines whether criteria commonly used by state programs to guide purchases of agricultural conservation easements influence public demand for farmland preservation. The results provide policy makers with additional information to assess current ranking criteria that set the standard for farmland preservation.Land Economics/Use,

Net Buyers, Net Sellers, and Agricultural Landowner Support for Agricultural Zoning

Agricultural zoning and land use restrictions are long-standing approaches for controlling non-agricultural development. Agricultural landowners may contest agricultural zoning if they expect zoning to reduce land prices on restricted land. However, it is common to find agricultural landowners on both sides of this issue. A prevailing economic explanation for variation in landowner support is that the price effect of zoning varies across land parcels and therefore, zoning may increases the value of some lands zoned for agricultural use. In this paper, we provide an additional explanation for variation in agricultural landowner support. We use the concepts of net buyers and net sellers of land to suggest that the utility effect of changing land prices depends on an agricultural landowner's position in the agricultural land market. Hence, even in situations where all agricultural landowners expect zoning to reduce agricultural land prices, some subset of agricultural landowners - i.e., net buyers - may benefit. Survey data from agricultural landowners is used to model the probability that an agricultural landowner will support agricultural zoning. The empirical findings are consistent with our hypothesis that net buyers and net sellers of agricultural land will differ in their support for agricultural zoning.Land Economics/Use,

Farmland Prices

land, price, Ontario, Canada, Agricultural and Food Policy, Agricultural Finance, Demand and Price Analysis, Land Economics/Use,