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Abstract

After controlling a variety of feeder cattle characteristics and market and sale conditions in Iowa feeder auctions, the price premiums for preconditioning claims (vaccinations and minimum 30 days of weaning) with and without third-party certification (TPC) are estimated as $6.12/cwt and $3.35/cwt, respectively. These premiums differ statistically (p<0.0001), and their difference exceeds the average participation cost of TPC ($1/cwt). This indicates that TPC is valued in the market to credibly signal preconditioning investment under asymmetric information.

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