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Labeling Policies in Food Markets: Private Incentives, Public Intervention, and Welfare Effects

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  • Zago, Angelo M.
  • Pick, Daniel H.

Abstract

This study considers the welfare impact of labeling policies of agricultural commodities with specific characteristics. Using a model of vertical differentiation, the effects on equilibrium and welfare levels are calculated. The introduction of the regulation and the emergence of two differentiated competitive markets leaves consumers and high-quality producers better off, while low-quality producers are worse off. With high costs and low quality differences, the total welfare impact of the regulation can be negative. Findings show that when high-quality producers can exercise market power, the regulation could be more easily accepted by producers, but it would have a negative effect on consumers.

Suggested Citation

  • Zago, Angelo M. & Pick, Daniel H., 2004. "Labeling Policies in Food Markets: Private Incentives, Public Intervention, and Welfare Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(1), pages 1-16, April.
    • Handle: RePEc:ags:jlaare:31143
    DOI: 10.22004/ag.econ.31143
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    Agricultural and Food Policy;

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