Jahn-Schramm-Spiller Reliability-of-Certification.Pdf
Gabriele Jahn, Matthias Schramm and Achim Spiller The Reliability of Certification: Quality Labels as a Consumer Policy Tool
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.
Numerous crises and scandals (BSE, FMD, etc.) have shaken the European food sector over the past few years. In spite of far-reaching regulations and governmental control, most of the causes were not detected until after the crises had occurred, leading to a decline in consumer confidence in the safety and quality of many food products (Hobbs, Fearne, & Spriggs, 2002; Sporleder & Goldsmith, 2001). As a consequence, many EU countries developed consumer protection strategies such as new quality labels based on neutral control throughout the whole value chain. At first sight, the labelling approaches seemed to be an adequate policy tool as they ensured highquality food and at the same time relieved public authorities of an additional financial burden (Caswell & Mojduszka, 1996). However, it is evident that the
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.
Numerous crises and scandals (BSE, FMD, etc.) have shaken the European food sector over the past few years. In spite of far-reaching regulations and governmental control, most of the causes were not detected until after the crises had occurred, leading to a decline in consumer confidence in the safety and quality of many food products (Hobbs, Fearne, & Spriggs, 2002; Sporleder & Goldsmith, 2001). As a consequence, many EU countries developed consumer protection strategies such as new quality labels based on neutral control throughout the whole value chain. At first sight, the labelling approaches seemed to be an adequate policy tool as they ensured highquality food and at the same time relieved public authorities of an additional financial burden (Caswell & Mojduszka, 1996). However, it is evident that the