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Valuing Varieties with Imperfect Output Quality Measurement

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  • David K. Lambert
  • William W. Wilson

Abstract

Markets for agricultural products may be inefficient when signals do not adequately reflect product characteristics important to market participants. Preferences can be explicitly reflected in price premiums for measurable characteristics using hedonic methods. However, when product quality information is costly to obtain, the problem is compounded. Bundling of quality traits by variety can serve to signal product quality. A procedure is developed to derive the value of different varieties in meeting buyer demands. An application to the hard red spring market wheat illustrates the use of a procedure to distinguish among varieties and provides empirical support for the existence of Akerlof's lemon market in the release of wheat varieties. Copyright 2003, Oxford University Press.

Suggested Citation

  • David K. Lambert & William W. Wilson, 2003. "Valuing Varieties with Imperfect Output Quality Measurement," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 95-107.
    • Handle: RePEc:oup:ajagec:v:85:y:2003:i:1:p:95-107
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    File URL: http://hdl.handle.net/10.1111/1467-8276.00105
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    Citations

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    Cited by:

    1. Dalton, Timothy J., 2004. "A household hedonic model of rice traits: economic values from farmers in West Africa," Agricultural Economics, Blackwell, vol. 31(2-3), pages 149-159, December.
    2. Bart Minten & Thomas Reardon, 2008. "Food Prices, Quality, and Quality's Pricing in Supermarkets versus Traditional Markets in Developing Countries," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(3), pages 480-490.
    3. Roberts, Shane & Brooks, Kathleen & Nogueira, Lia & Walters, Cory G., 2022. "The role of quality characteristics in pricing hard red winter wheat," Food Policy, Elsevier, vol. 108(C).
    4. MacDonald, James M. & Perry, Janet E. & Ahearn, Mary Clare & Banker, David E. & Chambers, William & Dimitri, Carolyn & Key, Nigel D. & Nelson, Kenneth E. & Southard, Leland W., 2004. "Contracts, Markets, and Prices: Organizing the Production and Use of Agricultural Commodities," Agricultural Economic Reports 34013, United States Department of Agriculture, Economic Research Service.
    5. Aubert, M. & Bouhsina, Z. & Codron, J.M. & Rousset, S., 2013. "Pesticide safety risk, food chain organization, and the adoption of sustainable farming practices. The case of Moroccan early tomatoes," Working Papers MoISA 201304, UMR MoISA : Montpellier Interdisciplinary center on Sustainable Agri-food systems (social and nutritional sciences): CIHEAM-IAMM, CIRAD, INRAE, L'Institut Agro, Montpellier SupAgro, IRD - Montpellier, France.
    6. Kurt B. Waldman & David L. Ortega & Robert B. Richardson & Daniel C. Clay & Sieglinde Snapp, 2016. "Preferences for legume attributes in maize-legume cropping systems in Malawi," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 8(6), pages 1087-1099, December.
    7. K. W. Chau & Lennon H. T. Choy, 2011. "Let the Buyer or Seller Beware: Measuring Lemons in the Housing Market under Different Doctrines of Law Governing Transactions and Information," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages 347-365.
    8. repec:lic:licosd:28911 is not listed on IDEAS
    9. Efthymios G. Tsionas & Subal C. Kumbhakar & Emir Malikov, 2015. "Estimation of Input Distance Functions: A System Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(5), pages 1478-1493.
    10. Wu-Yueh HU, 2013. "Effect of contract farming on the U.S. crop farmers' average return," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 59(5), pages 195-201.
    11. Venkatesh, P. & Sangeetha, V. & Pal, Suresh, 2015. "India’s Experience of Plant Variety Protection: Trends, Determinants and Impact," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 200413, Agricultural and Applied Economics Association.
    12. Yikuan Chen & B. Wade Brorsen & Jon T. Biermacher & Mykel Taylor, 2022. "Spatially varying wheat protein premiums," Letters in Spatial and Resource Sciences, Springer, vol. 15(3), pages 587-598, December.

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