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What's in a Name? Information, Heterogeneity, and Quality in a Theory of Nested Names

Author

Listed:
  • Bouamra-Mechemache, Zohra
  • Yu, Jianyu
  • Zago, Angelo
Abstract
Collective labels are widespread in food markets, either separated or nested with private brands; the latter known as nested names. We propose a model to explain the rationale of nested names, with collective labels being effective in reaching unaware consumers while individual brands help firms to reach aware consumers. We also incorporate the decision-making within the group of producers joining collective labels, taking into account their heterogeneity in providing quality. We show that nested names emerge when consumers become more aware of information on the label's quality and when producers become more heterogeneous. Welfare may decrease, however, when the group switches to nested names, because nested names may lead to lower quality incentives for the majority producers. The results also provide insights into the historical and recent trends in food industries, such as within-label differentiation and label fragmentation, and their welfare implications.

Suggested Citation

  • Bouamra-Mechemache, Zohra & Yu, Jianyu & Zago, Angelo, 2017. "What's in a Name? Information, Heterogeneity, and Quality in a Theory of Nested Names," TSE Working Papers 17-866, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:32213
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    References listed on IDEAS

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    Cited by:

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    2. Saïdi, Monia & Ay, Jean-Sauveur & Marette, Stéphan & Martin, Christophe, 2020. "Willingness-to-Pay for Reshuffling Geographical Indications," Journal of Wine Economics, Cambridge University Press, vol. 15(1), pages 95-111, February.
    3. Jean‐Sauveur Ay, 2021. "The Informational Content of Geographical Indications," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 523-542, March.
    4. Pecchioli, Bruno & Moroz, David, 2023. "Do geographical appellations provide useful quality signals? The case of Scotch single malt whiskies," Economic Modelling, Elsevier, vol. 124(C).
    5. Susana López‐Bayón & Marta Fernández‐Barcala & Manuel González‐Díaz, 2020. "In search of agri‐food quality for wine: Is it enough to join a geographical indication?," Agribusiness, John Wiley & Sons, Ltd., vol. 36(4), pages 568-590, October.
    6. Loïc Henry, 2023. "Adapting the designated area of geographical indications to climate change," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(4), pages 1088-1115, August.
    7. Jason A. Winfree, 2023. "Collective reputation and food," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(2), pages 666-683, June.
    8. Theodosios Tsiakis & Eleni Anagnostou & Giuseppe Granata & Vasiliki Manakou, 2022. "Communicating Terroir through Wine Label Toponymy Greek Wineries Practice," Sustainability, MDPI, vol. 14(23), pages 1-18, December.
    9. Ehmke, Mariah Dolsen & Bonanno, Alessandro & Boys, Kathryn & Smith, Trenton G., 2019. "Food fraud: economic insights into the dark side of incentives," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(4), October.

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    More about this item

    Keywords

    nested names; individual brands; collective labels; consumers' awareness; producer heterogeneity; quality provision;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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