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Credence Goods (credence + goods)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

The Advertising of Credence Goods as a Signal of Product Quality

THE MANCHESTER SCHOOL, Issue 1 2004
Sunku Hahn
The advertising of credence goods is analysed in a similar way to the way Milgrom and Roberts analysed the advertising of experience goods. The existing literature on credence goods has not considered the possibility that some consumers have the expertise to assess the product's quality and the possibility that the producer can advertise. I assume these two points and show that there exists a unique equilibrium that survives the ,intuitive criterion'. Also, it is shown that through encouraging producers to accept new technologies advertising may increase social welfare instead of just being a pure social cost. [source]

Product Safety Provision and Consumers' Information

AUSTRALIAN ECONOMIC PAPERS, Issue 4 2000
Stephan Marette
Economic mechanisms related to the provision of product safety are explored, with particular attention paid to the structure of consumers' information. The case of perfect information, of experience goods (for which consumers detect product safety after consumption) and of credence goods (where consumers cannot link a disease to a particular product consumed in the past) are explored. Imperfect competition is assumed in the supply sector. In the case of both perfect information and experience goods, market equilibrium is characterised by a less-than-socially optimal provision of safety, when the safety effort is costly. With credence goods, imperfect information leads to the absence of safety effort and to a market closure. Different types of public regulation aiming at increasing consumer protection and circumventing market failures are explored. Particular attention is paid to minimum safety standards, labels and liability enforcement. The relative efficiency of these instruments depends on the information structure. In the cases of perfect information and experience goods, a minimum safety standard can be an efficient instrument. Regulation is necessary but not sufficient to avoid market failure in the case of credence goods. [source]

Policy Development for Novel Foods: Issues and Challenges for Functional Food

CANADIAN JOURNAL OF AGRICULTURAL ECONOMICS, Issue 4 2002
Michele Veeman
Challenges in policy development for novel foods arise from information asymmetry associated with these credence goods. Policy development reflects pressures by firms and investors to apply health claims in marketing functional food, nutraceuticals and natural health products, which are growing market segments, relative to mature food markets. However, the wordings on health claims are often misinterpreted by consumers. Despite tendencies for some convergence in approaches to health claim policies, policy differs internationally. Related issues considered include factors influencing consumer preferences for these products and uncertainties in the markets for them. [source]