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2006

Iowa State University

CARD Working Papers

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Agricultural Production Clubs: Viability And Welfare Implications, Corinne Langinier, Bruce A. Babcock Aug 2006

Agricultural Production Clubs: Viability And Welfare Implications, Corinne Langinier, Bruce A. Babcock

CARD Working Papers

Consumers are in general less informed than producers about the quality of agricultural goods. To reduce he information gap, consumers can rely on standards (e.g., certification) that ensure quality and origin of the goods. These costly standards can be adopted by a group of producers of high-quality goods. We study the formation of such a group that we model as a club. We first investigate under what circumstances a club of a given size is desirable for producers, and for society. We then analyze the optimal size of the club when there exists a direct barrier to entry, and ...