Consumer Information and Product Quality Regulation

Product differentiation, market segmentation and the relevance of credence attributes for food require complex information. Lack of information, or its unreliability may result in negative welfare effects. Given that market failures can arise along food chains the provision of complete information requires public intervention. This paper aims to discuss the weaknesses in the present EU legislation and markets, with reference to information conveyed to consumers. It especially focuses on the case of PDOs. Particularly the paper discusses the following points: A)the complex nature of the information on the quality aspects labelled and/or guaranteed. Providing full and reliable information is not a trivial task. Consumer behaviour is deeply affected by information, and a consumer’s capability to use it is bounded. B) the high number of different quality regulations associated with a public guarantee, both private or collective. C) the overlapping of quality guarantees provided by different stakeholders along the food chain, that requires coordination policies in order to avoid a reduction of the reliability of the information provided. The difficulties in the design of a complete and effective regulation on product quality certifications and guaranties are discussed by taking into consideration two different issues: consumer’s capability to use quality information effectively, and the interaction between public intervention and firms’ strategies. Empirical evidence is also given on consumers’ discernment and behaviour.