Do Food Quality Schemes and Net Price Premiums Go Together?

This article addresses the issue of the profitability of Food Quality Scheme (FQS) products as compared to reference products, which are defined as analogous products without quality label. We approach this question by taking into account the level of the value chain (upstream, processing, and downstream), the sector (vegetal, animal, seafood) and the type of FQS (PGI, PDO, Organic). We collected original data for several products produced in selected European countries, as well as in Thailand and Vietnam. Comparisons depending on value chain level, sector and FQS are possible by using two comparable indicators: price premium and net price premium (including cost differential). The following principal conclusions were reached: 1) Price is higher for FQS products than for the reference products, regardless of the production level, the type of FQS or the sector; 2) Price premiums generated by FQS do not differ along the value chain, nor between sectors (vegetal, animal or seafood/fish); 3) Price premium for organic products is significantly higher than for PGI products, and this conclusion holds at upstream and processing levels, taking into account the costs directly related to production; 4) All organic products and almost all PDO and PGI products analysed benefit from a positive quality rent; 5) At upstream level and processing level, the relative weight of intermediate consumption in the cost structure is lower for organic products than for reference products

A Multinomial Logit Framework to Estimate Bid Shading in Procurement Auctions: Application to Cattle Sales in the Texas Panhandle

We develop an empirical methodology based upon multinomial probability models to estimate the magnitude of bid shading in cattle procurement in the Texas Panhandle region. The methodology works well in settings where data allow a good estimation of a bidder’s probability of winning, but the approach does not rely upon the bidding process following any particular structural framework or on the existence of a control group. Estimated markdowns of price from the competitive level are in the range of 5–10% and are somewhat larger than estimates of oligopsony markdowns from previous studies of cattle procurement in the U.S. Copyright Springer 2005auction, beef packing, bidding, concentration, multinomial logit, oligopsony,