Valuing Varieties with Imperfect Output Quality Measurement

13 Pages Posted: 31 Mar 2020

See all articles by David K. Lambert

David K. Lambert

North Dakota State University - College of Agriculture, Food Systems, & Natural Resources

William W. Wilson

North Dakota State University

Multiple version iconThere are 2 versions of this paper

Date Written: February 2003

Abstract

Markets for agricultural products may be inefficient when signals do not adequately reflect product characteristics important to market participants. Preferences can be explicitly reflected in price premiums for measurable characteristics using hedonic methods. However, when product quality information is costly to obtain, the problem is compounded. Bundling of quality traits by variety can serve to signal product quality. A procedure is developed to derive the value of different varieties in meeting buyer demands. An application to the hard red spring market wheat illustrates the use of a procedure to distinguish among varieties and provides empirical support for the existence of Akerlof's lemon market in the release of wheat varieties.

Keywords: agricultural markets, product quality, distance functions, wheat

Suggested Citation

Lambert, David K. and Wilson, William W., Valuing Varieties with Imperfect Output Quality Measurement (February 2003). American Journal of Agricultural Economics, Vol. 85, Issue 1, pp. 95-107, 2003, Available at SSRN: https://ssrn.com/abstract=3564561 or http://dx.doi.org/10.1111/1467-8276.00105

David K. Lambert (Contact Author)

North Dakota State University - College of Agriculture, Food Systems, & Natural Resources

315 Morrill Hall
Fargo, ND 58105
United States

William W. Wilson

North Dakota State University ( email )

Morrill 221F
Fargo, ND 58105
United States
701-231-7472 (Phone)
701-231-7400 (Fax)

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