IDEAS home Printed from https://ideas.repec.org/a/oup/ajagec/v96y2014i4p1030-1048..html
   My bibliography  Save this article

Strength of Protection for Geographical Indications: Promotion Incentives and Welfare Effects

Author

Listed:
  • Luisa Menapace
  • Gian Carlo Moschini

Abstract

We address the question of how the strength of protection for geographical indications (GIs) affects the GI industry's promotion incentives, equilibrium market outcomes, and the distribution of welfare. Geographical indication producers engage in informative advertising by associating their true quality premium (relative to a substitute product) with a specific label emphasizing the GI's geographic origin. The extent to which the names/words of the GI label can be used and/or imitated by competing products-which depends on the strength of GI protection-determines how informative the GI promotion messages can be. Consumers' heterogeneous preferences (vis-Ã -vis the GI quality premium) are modeled in a vertically differentiated framework. Both the GI industry and the substitute product industry are assumed to be competitive (with free entry). The model is calibrated and solved for alternative parameter values. Results show that producers of the GI and of the lower-quality substitute good have divergent interests: GI producers are better off with full protection, whereas the substitute good's producers prefer intermediate levels of protection (but they never prefer zero protection because they benefit indirectly if the GI producers' incentives to promote are preserved). For consumers and aggregate welfare, the preferred level of protection depends on the model's parameters, with an intermediate level of protection being optimal in many circumstances.

Suggested Citation

  • Luisa Menapace & Gian Carlo Moschini, 2014. "Strength of Protection for Geographical Indications: Promotion Incentives and Welfare Effects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(4), pages 1030-1048.
  • Handle: RePEc:oup:ajagec:v:96:y:2014:i:4:p:1030-1048.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/ajae/aau016
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:ajagec:v:96:y:2014:i:4:p:1030-1048.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.