Public Regulation as a Substitute for Trust in Quality Food Markets: What if the Trust Substitute cannot be Fully Trusted?

Abstract

Most food products can be classified as " credence" goods and regulations exist to provide consumers with a substitute for the lacking information and trust. The paper presents an analysis of the decisions of producers and consumers about a "credence" good in three institutional scenarios, which r eflect different levels of credibility of the regulation. The first scenario is a reference scenario in which the regulation is fully credible. In the second case considered there is no regulation, or, if there is, it is totally ineffective. In the third s cenario a regulation only partially credible provides consumers with an imperfect substitute for the information and trust they lack. Some of the producers of "low" quality goods share with the producers of "high" quality goods an interest in the introduction of a regulation as long as this is not fully credible. In addition, it may be the case that even producers of "low" quality goods who know they will not be able to sell their products labeling them as being of "high" quality may have an interest in supporting a not fully credible regulation. Finally, rather than having producers of "low" quality goods "block" the introduction of a fully credible regulation, producers of "high" quality goods are better off when a compromise is reached which leads to the approval of an imperfect regulation.

Foods and Places: Comparing Different Supply Chains

“…This is a way to certify the place of origin with the goal to enlarge the market beyond the place of origin as in this case the production area is related to the concept of typicality more than of proximity. As a consequence, information and trust rely on formal and codified rules with a third party guarantee [1,29]. Lastly, chains with a focal company that is a retailer specialized in high quality food and for which the place of origin highly matters, are presented.…”

“…In a nutshell, and with reference to implications that are meaningful to the present discourse, Ostrom's main findings are that common property protocols that regulate local community management are the most efficient ways to use CPR. This includes the reputation of the place itself (the CPR), as well as the sum of the reputations of each individual producer and, thus, relies on the producers' behaviors and on the way the GI is managed [29,46,47].…”

“…To this respect, it is worth underlining that the presence of the GI may paradoxically worsen the bargaining position of the farmers as they have no alternative to selling their produce to the processors within the GI [51]. Furthermore, being gathered under the same GI requires cooperation, while at the same time enhancing competition, free-riding, and other opportunistic behaviors may arise that may damage the GI reputation [29,49]. GIs managed by effective consortia generally work better in terms of product enhancement and for assuring smaller stakeholders a better positioning along the chain.…”

Geographical Indications and Quality Promotion of Agricultural Products in Vietnam: An Analysis of Government Roles

“…only producers know what they are selling and consumers could only know the characteristics of products once they are consumed (Anania & Nisticò, 2004). GIs can be an effective way to promote agricultural products in a context of globalisation by reducing the risk of misappropriation of names (Bramley & Biénabe, 2012) and avoiding the situations as "bad products drive out good ones" (Durand & Fournier, 2015).…”

Qualities of food

“…This raises the more general issue of the potential increase in instability of credence attributes with increasing complexity and globalisation of quality. Anania and Nisticò (2002) present a model which aims to explain the persistence of credence failures by comparing three institutional scenarios: no regulation; imperfect regulation; and perfect regulation. They conclude that producers, both individually and collectively, can have an interest in sustaining imperfect regulation, and for that reason quality labels must be considered an imperfect substitute for credence.…”