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Are geographical indications a worthy quality signal? A framework on Protected Designation of Origin with endogenous quality choice

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  • Marion Desquilbet

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

Abstract

The paper provides a theoretical framework to analyze the effects of Protected Designation of Origin (PDO) labeling on quality choices and welfare. Our model distinguishes two attributes of goods: gustatory quality, which is a search attribute, and geographical origin, which is a credence attribute. We compare equilibria with no label, "non-binding labeling" (i.e. when no requirement on production methods is binding to get the PDO label) and "binding labeling". We find that the PDO good is not necessarily the high-quality good. When it is, the introduction of non-binding labeling causes a decrease in quality. Restrictions on production methods are warranted to maintain the quality level of the labelable good, but they adversely affect the PDO firm.

Suggested Citation

  • Marion Desquilbet, 2008. "Are geographical indications a worthy quality signal? A framework on Protected Designation of Origin with endogenous quality choice," Post-Print hal-02285603, HAL.
    • Handle: RePEc:hal:journl:hal-02285603
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    References listed on IDEAS

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    1. Crampes, Claude & Hollander, Abraham, 1995. "Duopoly and quality standards," European Economic Review, Elsevier, vol. 39(1), pages 71-82, January.
    2. Lambertini, Luca, 1996. "Choosing Roles in a Duopoly for Endogenously Differentiated Products," Australian Economic Papers, Wiley Blackwell, vol. 35(67), pages 205-224, December.
    3. Crampes, Claude & Hollander, Abraham, 1995. "How Many Karats Is Gold: Welfare Effects of Easing a Denomination Standard," Journal of Regulatory Economics, Springer, vol. 7(2), pages 131-143, March.
    4. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 113-131, June.
    5. Cremer, Helmuth & Thisse, Jacques-Francois, 1994. "Commodity Taxation in a Differentiated Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(3), pages 613-633, August.
    6. Uri Ronnen, 1991. "Minimum Quality Standards, Fixed Costs, and Competition," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 490-504, Winter.
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    Cited by:

    1. Laura Daniuseviciute-Brazaite, 2021. "Education for Sustainable Development: Sustainability-Related Food Labels," Sustainability, MDPI, vol. 13(15), pages 1-8, July.
    2. Vecchio, Riccardo & Annunziata, Azzurra, 2011. "The role of PDO/PGI labelling in Italian consumers’ food choices," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 12(2).
    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. Erpeng Wang & Zhenzhen Liu & Zhifeng Gao & Qin Wen & Xianhui Geng, 2022. "Consumer preferences for agricultural product brands in an E‐commerce environment," Agribusiness, John Wiley & Sons, Ltd., vol. 38(2), pages 312-327, April.
    5. 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).

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