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Explaining the Emergence of Private Standards in Food Supply Chains

Author

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  • Eric Giraud-Héraud

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris, INRA - Institut National de la Recherche Agronomique)

  • Cristina Grazia

    (Agricultural Economics and Engineering Department - UNIBO - Alma Mater Studiorum Università di Bologna = University of Bologna)

  • Abdelhakim Hammoudi

    (INRA - Institut National de la Recherche Agronomique)

Abstract

This paper provides an original theoretical framework to better understand the raise of private standards in agrifood chains. Reasons for the emergence and conditions for the effectiveness of private standards are identified, by investigating retailers' strategic behaviour and, more precisely, both interactions among retailers and upstream producers and the role of consumer behaviour vis-àvis the food safety risk. We show that a relatively strict Minimum Quality Standard (MQS) may incentive the retailer to develop an even more demanding private standard, when market-driven incentive is relatively high; this result crucially depends on consumer risk misperception. Setting a private standard may improve market access for upstream producers. In addition, it may reduce food safety risk and, at the same time, improve consumer surplus.

Suggested Citation

  • Eric Giraud-Héraud & Cristina Grazia & Abdelhakim Hammoudi, 2012. "Explaining the Emergence of Private Standards in Food Supply Chains," Working Papers hal-00749345, HAL.
    • Handle: RePEc:hal:wpaper:hal-00749345
    Note: View the original document on HAL open archive server: https://hal.science/hal-00749345
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    References listed on IDEAS

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    Keywords

    Private standards; vertical relationships; risk misperception;
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