Journal
JOURNAL OF INSTITUTIONAL AND THEORETICAL ECONOMICS-ZEITSCHRIFT FUR DIE GESAMTE STAATSWISSENSCHAFT
Volume 160, Issue 4, Pages 681-701Publisher
J C B MOHR
DOI: 10.1628/0932456042776113
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Most food products can be classified as credence goods, and regulations exist to provide consumers with a substitute for the lacking information and trust. Rather than having no regulation in place, producers of high-quality goods are better off when a compromise is reached that leads to an imperfect regulation. Some of the producers of low-quality goods benefit by cheating under a not fully credible regulation. Even producers of low-quality goods who will never label their products as being of high quality may profit from the introduction of an imperfect regulation.
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