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Abstract

This paper provides an original theoretical framework to better understand the raise of private quality standards in agrifood chains. Reasons for the development and conditions for the effectiveness of private quality standards are identified, by investigating firms’ strategic behaviour and, more precisely, both interactions among processing/retailing firms and upstream producers and the role of consumers’ behaviour. Considering different levels of consumers risk perception, we show that the incentive for firms to develop a more stringent private standard may increase with the level of the regulated minimum quality standard. Moreover, setting a private standard may reduce the risk of consumer dissatisfaction while increasing the marketed quantity. Unexpected positive effects of a strengthening of the minimum quality standard may arise, in the sense that both market access for upstream producers and consumer surplus are improved.

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