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Impacts of Minimum Quality Standards Imposed Through Marketing Orders or Related Producer Organizations

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  • Tina L. Saitone
  • Richard J. Sexton

Abstract

We analyze the impacts of minimum quality standards (MQS) imposed by producers acting collectively through a producer organization, such as a marketing order. MQS imposed in a competitive market can never enhance social welfare because in general an MQS creates two deadweight losses--one due to inefficient enhancement of product quality and a second due to wastage of the low-quality product. Any MQS that a competitive industry implements based upon a profit criterion causes all consumers in the market to be harmed. However, an MQS may be preferred relative to supply control as a second-best instrument for transferring income to producers. Copyright 2010, Oxford University Press.

Suggested Citation

  • Tina L. Saitone & Richard J. Sexton, 2010. "Impacts of Minimum Quality Standards Imposed Through Marketing Orders or Related Producer Organizations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 164-180.
    • Handle: RePEc:oup:ajagec:v:92:y:2010:i:1:p:164-180
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    File URL: http://hdl.handle.net/10.1093/ajae/aap005
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    Citations

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    Cited by:

    1. McCluskey, Jill J. & Winfree, Jason A., 2017. "Collective Reputation in Online Platforms and Private Quality Standards," 2018 Allied Social Sciences Association (ASSA) Annual Meeting, January 5-7, 2018, Philadelphia, Pennsylvania 266302, Agricultural and Applied Economics Association.
    2. Tauber, Ramona & Anders, Sven M. & Langinier, Corinne, 2011. "The Economics of Geographical Indications: Welfare Implications," Working Papers 103262, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
    3. Teuber, Ramona, 2011. "Protecting Geographical Indications: Lessons learned from the Economic Literature," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 116081, European Association of Agricultural Economists.
    4. Simmons, Vivian & Yu, Jisang, 2018. "Food Safety Regulations on Unobservable Qualities in Developing Countries," 2018 Annual Meeting, August 5-7, Washington, D.C. 273892, Agricultural and Applied Economics Association.
    5. Jose G. Nuno‐Ledesma, 2021. "An Analysis of Portion Cap Rules with a Multiproduct Seller," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(5), pages 1820-1831, October.
    6. Jiaoju Ge & Alfonso Flores-Lagunes & Kilmer, 2015. "An analysis of bargaining power for milk cooperatives and milk processors in Florida," Applied Economics, Taylor & Francis Journals, vol. 47(48), pages 5159-5168, October.

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