| Affiliation: | (1) Research Assistants, University of Goettingen, Platz der Goettinger Sieben 5, D-37073 Goettingen, Germany;(2) Professor of Food Marketing at the Institute of Agricultural Economics, University of Goettingen, Platz der Goettinger Sieben 5, D-37073 Goettingen, Germany |
| Abstract: | Given the large number of certification systems in the food industry, it is surprising that there are only a few research approaches to the economics of certification. Certification schemes are used to ensure marketing claims for unobservable quality attributes. Under asymmetric information, process-oriented quality characteristics such as organic farming, animal welfare, or fair trade raise the question of mislabelling. In the long run, only a reliable control procedure can reduce the risk of food scandals. The article presents a model which includes several starting points to enhance the efficiency of certification systems and the corresponding labels. On the whole, tendencies towards price wars on the certification market and considerable differences in performance reveal the necessity of institutional changes. Strategies for reducing auditors dependence, intensifying liability, increasing reputation effects, and minimizing audit costs are suggested. Finally, policy implications for public and private monitoring are discussed. |
