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The Welfare Implications of Minimum Quality Standards

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  • Nancy E. Bockstael

Abstract

Previous analysis of the social welfare implications of minimum quality standards has yielded no decisive results. In this paper the specific nature of consumer and producer responses to quality standards is incorporated into the analysis. Both consumer and producer gains are shown to be impossible when consumers can perceive quality before purchase, even if low quality produce is diverted to secondary markets. Standards unambiguously reduce net social benefits. The paper explores the possibility that minimum quality standards are a form of rent-seeking behavior.

Suggested Citation

  • Nancy E. Bockstael, 1984. "The Welfare Implications of Minimum Quality Standards," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(4), pages 466-471.
    • Handle: RePEc:oup:ajagec:v:66:y:1984:i:4:p:466-471.
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    Cited by:

    1. Essaji Azim, 2010. "Trade Liberalization, Standards and Protection," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-21, July.
    2. Costanigro, Marco & Scozzafava, Gabriele & Casini, Leonardo, 2019. "Vertical differentiation via multi-tier geographical indications and the consumer perception of quality: The case of Chianti wines," Food Policy, Elsevier, vol. 83(C), pages 246-259.
    3. Lippert, Christian, 2002. "Zur Ökonomik der Kontrollmaßnahmen bei Lebensmitteln und Futtermitteln," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 51(03), pages 1-14.
    4. Philippe Marcoul & John Lawrence, 2007. "Grader Bias in Cattle Markets? Evidence from Iowa," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 890-903.
    5. Jason A. Winfree & Jill J. McCluskey, 2005. "Collective Reputation and Quality," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 206-213.
    6. Caswell, Julie A., 1988. "Federal and State Regulations of Food Product Safety and Quality: A Selected, Partially Annotated Bibliography," Miscellaneous Publications 320010, United States Department of Agriculture, Economic Research Service.
    7. Chambers, Robert G. & Weiss, Michael D., 1990. "Minimum Quality Standards and Asymmetric Information," Working Papers 197752, University of Maryland, Department of Agricultural and Resource Economics.
    8. repec:lic:licosd:23609 is not listed on IDEAS
    9. Nie, Wenjing & Abler, David & Li, Taiping, 2021. "Grading attribute selection of China's grading system for agricultural products: What attributes benefit consumers more?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 93(C).
    10. Hennessy, David A., 1996. "Information Asymmetry As a Reason for Vertical Integration," Staff General Research Papers Archive 10422, Iowa State University, Department of Economics.
    11. Rutherford, William & McGimpsey, William & Narayan, Prakash, 2013. "Evaluation of New Zealand’s regulatory framework to support the reputation of horticultural commodity exports," 2013 Conference, August 28-30, 2013, Christchurch, New Zealand 187038, New Zealand Agricultural and Resource Economics Society.
    12. Teisl, Mario F. & Roe, Brian, 1998. "The Economics of Labeling: An Overview of Issues for Health and Environmental Disclosure," Agricultural and Resource Economics Review, Cambridge University Press, vol. 27(2), pages 140-150, October.
    13. Anderson, Kym & Damania, Richard & Jackson, Lee Ann, 2004. "Trade Standards and the Political Economy of Genetically Modified Food," CEPR Discussion Papers 4526, C.E.P.R. Discussion Papers.
    14. Johan F.M. Swinnen & Thijs Vandemoortele, 2008. "The Political Economy of Nutrition and Health Standards in Food Markets ," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(3), pages 460-468.
    15. Mainville, Denise Y. & Zylbersztajn, Decio & Farina, Elizabeth M.M.Q. & Reardon, Thomas, 2005. "Determinants of retailers' decisions to use public or private grades and standards: Evidence from the fresh produce market of Sao Paulo, Brazil," Food Policy, Elsevier, vol. 30(3), pages 334-353, June.
    16. Hoehn, John P., 1989. "Consumer Demand for Innovation in Food Safety," Staff Paper Series 201028, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    17. Harvey Lapan & GianCarlo Moschini, 2007. "Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 769-783.
    18. Angelo Zago, 2004. "Quality Production and Quality Indicators in Intermediate Products," Working Papers 16/2004, University of Verona, Department of Economics.
    19. Figueroa, Enrique E., 1994. "Pesticide Use And Produce Quality: Evaluating The Role Of Private Sector Institutions," Pesticide Use and Produce Quality: Proceedings of a Workshop 260054, Food and Agricultural Marketing Consortium (FAMC).
    20. Zhang, Ruojin, 2016. "The Effects of Residue Tolerance on Pesticide Use, Hop Marketing and Social Welfare," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235155, Agricultural and Applied Economics Association.
    21. Zago, Angelo M., 2002. "Quality Indicators And Intermediate Products: A Non-Parametric Approach," 2002 Annual meeting, July 28-31, Long Beach, CA 19591, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    22. Marco J. W. Kotschedoff & Max J. Pachali, 2020. "Higher Minimum Quality Standards and Redistributive Effects on Consumer Welfare," Marketing Science, INFORMS, vol. 39(1), pages 253-280, January.
    23. Noelke, Corinna M. & Caswell, Julie A., 2000. "A Model Of The Implementation Of Quality Management Systems For Credence Attributes," 2000 Annual meeting, July 30-August 2, Tampa, FL 21874, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    24. Fischer, Ronald & Serra, Pablo, 2000. "Standards and protection," Journal of International Economics, Elsevier, vol. 52(2), pages 377-400, December.

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