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Markets segmented by regional-origin labelling with quality control

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It is the objective of this paper to provide a methodological framework for the analysis of regional marketing programs which inlclude regional-origin labelling as well as quality assurance and control. Such programs are increasingly being introduced in Europe and other parts of the world as a means against quality uncertainty in globalized markets. An equilibrim - displacement model is developed for a segmented market with differential qualities that can be utilized for a broad variety of marketing programs. It is applied to one selected European case, i.e. “Gepruefte Qualitaet - Bayern”. It is shown that the price impacts on high-quality and low-quality segments depend crucially on substitutive relationships between the markets and the advertising elasticities. Welfare implications for producers in a program depend strongly on advertising elasticities, too, but also on the costs of participation including quality control and on the co-financing mechanism between government and producers.

Document Type: Research Article


Affiliations: 1: Department of Rural Economy, University of Alberta, Edmonton, Alberta, Canada 2: Department of Agricultural, Environmental, and Development Economics at Ohio State University, Columbus, OH, USA 3: Institute of Agricultural Policy and Market Research, University of Giessen, Giessen, Germany

Publication date: February 1, 2009

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