Product quality and reputation in food and agriculture

Authored by: Anthony R. Delmond , Jill J. McCluskey , Jason A. Winfree

The Routledge Handbook of Agricultural Economics

Print publication date:  July  2018
Online publication date:  July  2018

Print ISBN: 9781138654235
eBook ISBN: 9781315623351
Adobe ISBN:

10.4324/9781315623351-7

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Abstract

This chapter discusses issues regarding product quality in food and agricultural industries. Food is often horizontally differentiated, thereby segmenting various markets, but it can also be vertically differentiated, where some food is deemed to be of higher quality. Even when food quality may be considered exogenous, farmers are sometimes able to endogenously choose product quality at a cost. When food quality is unknown to consumers, they often rely on the reputation of the firm, the region, or some combination of both. We give an overview of the empirical work that has been done on food quality and reputation in agriculture. Finally, we discuss various policies aimed at changing food quality, such as minimum quality standards, certification, third-party verification, and quotas. The benefits and costs of these policies largely depend upon the assumptions made about market power, consumer preferences, and the endogeneity of quality.

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