Quality Certification by Geographical Indications, Trademarks and Firm Reputation

 We develop a reputation model to study the concurrent use of trademarks and certification for food products with a regional identity, known as geographical indications (GIs). The model extends Shapiro’s (1983) approach to modeling reputation to a situation in which two technologies for the production of quality are available, one of which is available only in the GI region and has a cost advantage for the production of higher quality levels. In this setting, trademarks capture firm-specific reputations whereas GI certification captures a notion of collective reputation. The model shows that GI certification improves the ability of reputation to operate as a mechanism for assuring quality when it is linked to some inherent attributes of a particular production area. We discuss some welfare implications of introducing GI certification and show that an EU-style sui generis GI certification is preferable to the US-style approach based on certification marks. asymmetric information; certification; geographical indications; reputation; quality; trademarks.

Quality Certification by Geographical Indications, Trademarks and Firm Reputation

We study firm reputation as a mechanism to assure product quality in perfectly competitive markets in a context in which both certification and trademarks are available. Shapiro’s (1983) model of reputation is extended to reflect both collective and firm-specific reputations, and this framework is used to study certification and trademarks for food products with a regional identity, known as geographical indications (GIs). Our model yields two primary results. First, in markets with asymmetric information and moral hazard problems, credible certification schemes reduce the cost of establishing reputation and lead to welfare gains compared to a situation in which only private trademarks are available. Hence, certification improves the ability of reputation to operate as a mechanism for assuring quality. Second, the actual design of the certification scheme plays an important role in mitigating informational problems. From a policy perspective, our results have implications for the current debate and negotiations on GIs at the World Trade Organization and the ongoing product quality policy reform within the European Union. With regard to the instrument of choice to provide intellectual property protection for GIs, our model favors a sui generis scheme based on appellations over certification marks. Finally, our model supports the validity of the traditional specialities guaranteed scheme of the European Union as an instrument for the provision of high-quality products that are not linked to a geographic area.Asymmetric Information, Certification, Geographical Indications, Quality, Reputation, Environmental Economics and Policy, D23, D82, L14, L15, Q1,

Geographical indications and quality promotion in food and agricultural markets: domestic and international issues

This dissertation addresses three questions concerning the economics of geographical indications (GIs) and the role of intellectual property (IP) protection in the provision of quality in food and agricultural markets. The first essay compares and contrasts different instruments (i.e., alternative certification schemes and trademarks) used to provide IP protection for GIs. From a policy perspective, this essay offers recommendations with regard to the most desirable type of IP protection instrument for GIs. The model indicates that a sui generis scheme based on appellations is preferable to standard instruments, such as certification marks, that are currently used in many important markets including the United States, because appellations improve the collective reputation of certified products and reduce the total cost (i.e., the sum of production and information costs) of providing quality compared to standard instruments. The second essay investigates whether consumers recognize and value the informational content of a variety of nested geographical origin labels from foreign countries. This study disentangles three types of geographical origin labels with different levels of geographical differentiation: country-of-origin labels and two types of GIs, protected designations of origin (PDO) and protected geographical indications (PGI). Consumer data show that, within the context of a high-quality value-added commodity such as extra virgin olive oil, consumers\u27 willingness to pay for oils from different countries varies, ceteris paribus, across countries, and that within a country consumers have a greater willingness to pay for GI-labeled than non-GI-labeled products. We also find evidence that consumers value PDOs more than PGIs. The third essay investigates the incentives of GI-exporting and GI-importing countries to strengthen the current TRIPS provisions for GIs. This essay explicitly considers the role of promotion in expanding market demand when consumers lack information regarding either the existence or the features of the GI and GI-like products. The model highlights the diverging interests of GI-exporting and GI-importing countries with regard to GI provisions in international markets and provides a key to interpret the current controversy over GIs among WTO members

WHAT DETERMINES THE USE OF BRANDS AND SEALS OF APPROVAL AS EXTRINSIC QUALITY CUES IN CONSUMERS’ PORK PURCHASE DECISION?

In today’s saturated food markets with increasingly homogeneous products food quality provides an opportunity for product differentiation. We want to answer the question what determines the use of extrinsic quality cues (brands, seals of approval) in consumers’ pork purchase decision. Therefore, we accomplished a consumer survey (n=767) at different German retailers. The results show that consumers’ pork purchase at small supermarkets, use of household leaflets to make purchase decisions and modest income level determines the use of seals of approval. Consumers who buy pork at small supermarkets and discounters, and who use household leaflets use brands.Extrinsic quality cues, brand, seal of approval, pork, purchase decision-making, Germany., Food Consumption/Nutrition/Food Safety,

Analyzing pork purchases at the point of sale – The role of consumer involvement

Involvement is an important psychological construct for understanding consumers’ underlying purchase decision process and those factors that shape product perceptions. In order to better understand consumer purchase behavior for low and high priced pork cuts, a series of field interviews at a variety of food retailers were conducted with actual pork shoppers using the New Involvement Profile (NIP) developed by Jain and Srinivasan (1990). In addition to responses to a series of questions designed to assess consumers’ involvement when purchasing pork, informational elements including socio-demographic information and pork attributes (e.g., origin, advertisement, on sale) were also included in the analysis. Key results from the study show individuals with high risk factors were significantly less likely to purchase high price cuts of pork. However this factor was mitigated by high price cuts on sale. Advertising is found to engage consumers with specific factors including those individuals who place a symbolic value on pork. Similar results are found for certain individuals based upon the type of store in which shopping took place. Results from our study may help companies to develop specific strategies to target high and low involved consumer segments. For instance, focusing on particular labeling schemes to increase consumers’ trust in meat producers could be used to target high involved shoppers. Additionally, based upon the empirical evidence this would have an added benefit by supporting the purchase of higher priced cuts of pork.pork, purchase behavior, consumer involvement, point of sale, Agribusiness, Consumer/Household Economics, Marketing, C93, D12, Q13,

Geographical Indications and the Competitive Provision of Quality in Agricultural Markets

The economics of geographical indications (GIs) is assessed within a vertical product differentiation framework that is consistent with the competitive structure of the agricultural sector with free entry/exit. It is assumed that certification costs are needed for GIs to serve as (collective) credible quality certification devices, and production of high-quality product is endogenously determined. We find that GIs can support a competitive provision of quality that partly overcomes the market failure and leads to clear welfare gains, although they fall short of delivering the (constrained) first-best level of the high-quality good. The main beneficiaries of the welfare gains are consumers. Producers may also accrue some benefit if the production of high-quality products draws on scarce factors that they own.geographical indications; quality certification; Welfare; competitive industry; free entry/exit; Marshallian stability; trademarks

Quality certification by geographical indications, trademarks and firm reputation

We develop a reputation model to study the concurrent use of trademarks and certification for food products with a geographical indication (GI). The model extends Shapiro\u27s (1983) approach to modelling reputation to a situation in which two technologies for the production of quality are available, one of which is available only in the GI region. In this setting, trademarks capture firm-specific reputations, whereas GI certification captures a notion of collective reputation. The model shows that GI certification improves the ability of reputation to operate as a mechanism for assuring quality linked to some inherent attributes of a particular production area

Factors Influencing Corn Fungicide Treatment Decisions

Fungal disease management in U.S. corn production has undergone a major shift in the last 2 decades. The decision to apply fungicide, a management practice that was once rarely considered, is now contemplated annually by many U.S. corn producers. We investigate potential factors underlying the fungicide treatment decision. We use economics, agronomy, and plant pathology literature to develop a conceptual model of the fungicide treatment decision and test the model using a survey of Midwest corn producers. We find the treatment decision is positively related to perceived economic gains, but heuristic factors also have a strong influence

Who cares about food origin? A comparison of hypothetical survey responses and actual shopping behavior

This paper explores the relevance of food origin to consumers when making product purchase decisions. We use data from a survey of pork shoppers at the point of sale of five food retailers in Germany. Participants engaged in both a hypothetical survey eliciting evaluations of the importance of different pork attributes and a series of questions related to their knowledge about the attributes of their actual purchase of pork. This enables us to compare hypothetical responses with actual purchase behavior. The results show that origin indeed is a relevant attribute to a subset of consumers. A share of consumers does pay attention to origin labels and is willing to undertake costly search for origin information. Furthermore, the data give evidence that there is a strong, but not perfect, degree of agreement between hypothetical survey responses and actual shopping behavior. This result is supportive of the use of experimental methods.hypothetical survey responses, actual shopping behavior, pork, origin labeling, Consumer/Household Economics, Research Methods/ Statistical Methods,