Interaction Between Food Attributes in Markets: The Case of Environmental Labeling

Some consumers derive utility from using products produced with specific processes, such as environmentally friendly practices. Means of verifying these credence attributes, such as certification, are necessary for the market to function effectively. A substitute or complementary solution may exist when consumers perceive a relationship between a process attribute and other verifiable product attributes. We present a model where the level of search and experience attributes influences the likelihood of production of eco-friendly products. Our results suggest that the market success of eco-friendly food products requires a mix of environmental and other verifiable attributes that together signal credibility.
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Grolleau, Gilles; Caswell, Julie A., Interaction Between Food Attributes in Markets: The Case of Environmental Labeling, Journal of Agricultural and Resource Economics, Volume 31, Issue 3, December 2006, Pages 471-484

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