A GAME THEORETIC APPROACH TO ORGANIC FOODS: AN ANALYSIS OF ASYMMETRIC INFORMATION AND POLICY

Demand for healthy, safe and environmentally friendly food products has been increasing. In response, producers are marketing organic and other quality-differentiated foods, sometimes claiming to have followed sound environmental and animal welfare practices. These products frequently have unobservable quality attributes. If the profit-maximizing producer is able to deceive the consumer with a false claim, then he or she will enjoy a higher price with lower production costs (compared to the full disclosure outcomes). The analysis described in this paper shows that repeat-purchase relationships and third party monitoring are required for high-quality credence goods to be available. Policy implications of this analysis for national organic food standards are discussed.


Issue Date:
2000-04
Publication Type:
Journal Article
Record Identifier:
http://ageconsearch.umn.edu/record/31334
PURL Identifier:
http://purl.umn.edu/31334
Published in:
Agricultural and Resource Economics Review, 29, 1
Page range:
1-9
Total Pages:
9




 Record created 2017-04-01, last modified 2018-11-28

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