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Vertical Differentiation and Credence Goods: Harmonized Labeling and Gains from International Integration

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  • Sheldon, Ian M.
  • Roe, Brian E.

Abstract

Using a model of vertical product differentiation, we show under what institutional circumstances welfare gains will be maximized as economies integrate and harmonize labeling and certification policies for credence goods. Specifically, we show that harmonized mandatory, exclusive discrete labeling will not maximize the gains from economic integration, i.e., the choice of labeling regime can have a negative effect on market structure if firms choose to exit, reducing the range and quality of goods in the integrated market.

Suggested Citation

  • Sheldon, Ian M. & Roe, Brian E., 2008. "Vertical Differentiation and Credence Goods: Harmonized Labeling and Gains from International Integration," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6340, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea08:6340
    DOI: 10.22004/ag.econ.6340
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    References listed on IDEAS

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