Moral hazard, vertical integration, and public monitoring in credence goods

Vetter, Henrik; Karantininis, Kostas

doi:10.1093/eurrag/29.2.271

Cited by 57 publications

(35 citation statements)

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“…Because obtaining and processing information is a costly process in itself, consumers may assess quality on the basis of these generic firm types as "quasi-labels." Vis-à-vis locally producing firms (e.g., utilities run by the municipality or consumer-owned businesses like cooperatives), it might be easier to obtain information regarding the electricity generation process (Bonus, 1986;Vetter & Karantininis, 2002). Specifically, they might believe that because information from municipality-owned utilities and cooperatives is accessible at low cost, these firms may be more trustworthy and less likely to engage in dishonest behavior when reporting quality (cf.…”

Section: Theoretical Framework and Contextmentioning

confidence: 99%

Quality uncertainty and the market for renewable energy: Evidence from German consumers

2016

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Consumers can choose from a wide range of electricity supply contracts, including green power options. Electricity produced from renewable energy involves information asymmetries. With a sample of more than 2,000 German electricity consumers, we tested the proposition of a "lemon market" for renewable energy in a discrete choice experiment.Specifically, we found that, compared to investor-owned firms, additional willingness-to-pay (WTP) for renewable energy is approximately double when offered by cooperatives or municipally-owned electricity utilities. Consumers who are experienced with switching suppliers have an additional WTP of one Eurocent per kilowatt hour for cooperatives and two Eurocents for public enterprises. The results demonstrate that organizational transformation in dynamically-changing electricity markets is not only driven by political initiatives but also by consumers' choices on the market. Public policy may reduce information asymmetries by promoting government labeling of green energy products.

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Section: Theoretical Framework and Contextmentioning

confidence: 99%

Quality uncertainty and the market for renewable energy: Evidence from German consumers

2016

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“…Part of this same problem is adverse selection where a firm feigns compliance to gain reputation and market share without the costs involved with actual compliance (King and Lenox 2000). The moral hazard problem is present in markets where the quality (in this case, the invasive quality) of a product is not well understood or cannot be verified by consumers (Akerlof 1970, Cavaliere 2000, Vetter and Karantininis 2002. This can especially be a problem for higher priced, high demand cultivars where profit rewards will be the motivation for firms to cheat.…”

Section: Legislated and Voluntary Regulationmentioning

confidence: 99%

Conundrums of a complex vector for invasive species control: a detailed examination of the horticultural industry

2010

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Historically the horticultural industry has transformed the US landscape through intentional cultivar introductions and unintentional introductions of weeds, insects and plant diseases. While it has been demonstrated that the horticultural industry, in particular the ornamental subsector, is an important vector for the introduction and dispersal of invasive species, known invasive plants continue to be sold while new cultivars are introduced at an ever increasing rate. This study examines the horticultural trade as a vector for invasive species, its agents, and characterizes the complexity of the distribution channel. Numerous factors have contributed to the recent expansion in marketed cultivars, including technological, industry growth, and marketing developments. The result has been an increased and sophisticated consumer demand with a corresponding aggressive scouring of the planet for new crops, many of which are introduced into the market without sufficient testing for invasive tendencies. Traditional approaches to invasive horticultural crop control (regulation, self-regulation), which target players in the distribution channel before and/or after cultivar release, have had limited effectiveness and buy-in because these approaches do not address the industry's complexities and economic incentives. Involvement and education of consumers may provide better oversight outcomes by addressing the moral hazard problem while acknowledging the key characteristics of the industry.

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“…Vorst (2002) [2] investigated into the contamination of agri-food, and pointed out that governments should play an important role in the trace of agri-food supply chains. Vetter(2002) [3]. contended that vertical integration was an effective method to handle moral hazard in the market where consumers cannot verify the safety and characteristics of products.…”

Section: From the Perspective Of Supply Chainmentioning

confidence: 99%

A Review of Literature for Research on Urban Demand Oriented Agri-Food Cold Chain Logistics Management System

An¹,

Lv²,

Chen³

2015

JSS

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Agri-food cold chain is at the very beginning in China, however, it has been the focus of academic study abroad. Most studies mainly lay emphasis on the awareness of agricultural security issues, agri-food traceability and making researches from the perspective of supply chain; the orientation of researches includes some parts or links, etc. At present, in China, there are a lot of factors impacting on agri-food quality safety, researchers conduct studies on agri-food cold chain mainly from four aspects: legal system, production and distribution standards, regulatory system, and market access standards. This paper presents an overview of agri-food chain study from the perspectives of supply chain, quality safety, traceability, standardization, technology and urban management.

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Moral hazard, vertical integration, and public monitoring in credence goods

Cited by 57 publications

References 0 publications

Quality uncertainty and the market for renewable energy: Evidence from German consumers

Quality uncertainty and the market for renewable energy: Evidence from German consumers

Conundrums of a complex vector for invasive species control: a detailed examination of the horticultural industry

A Review of Literature for Research on Urban Demand Oriented Agri-Food Cold Chain Logistics Management System

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