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When Are Private Standards More Stringent than Public Standards?
Author(s) -
Vandemoortele Thijs,
Deconinck Koen
Publication year - 2014
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aat064
Subject(s) - stylized fact , politics , public economics , quality (philosophy) , government (linguistics) , business , economics , political science , macroeconomics , philosophy , linguistics , epistemology , law
Retailers' private standards are increasingly important for addressing consumer concerns about safety, quality, and social and environmental issues. Empirical evidence shows that these private standards are frequently more stringent than their public counterparts. This article develops a political economy model that helps explain this stylized fact. We show that if producers exercise their political power to persuade the government to impose a lower public standard, retailers may apply their market power to install a private standard at a higher level than the public one, depending on several factors.