Behaviors in the market for safe vegetables under information asymmetry: modeling approach

The paper proposes a theoretical model that depicts a shop owner’s behavior in the market for safe vegetables under informational asymmetry between sellers and buyers. In the model, the shop owner claims his shop provides safe vegetables and is maximizing profit by mixing ordinary vegetables with sa...

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Bibliographic Details
Published inEurasian economic review Vol. 8; no. 3; pp. 381 - 392
Main Authors Le, Hoi Quoc, Nguyen, Thi Minh
Format Journal Article
LanguageEnglish
Published Cham Springer International Publishing 01.12.2018
Springer Nature B.V
Subjects
Asymmetric information
Asymmetry
Consumer behavior
Consumer protection
Consumers
Consumption
Credibility
Developing countries
Economic models
Economics
Economics and Finance
Food
Game theory
Labeling
LDCs
Natural & organic foods
Original Paper
Profits
Quality
Stock exchanges
Supermarkets
Third party
Trust
Vegetables
Safe vegetable market
Asymmetry information
Q18
Modelling
D18
C02
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Summary:The paper proposes a theoretical model that depicts a shop owner’s behavior in the market for safe vegetables under informational asymmetry between sellers and buyers. In the model, the shop owner claims his shop provides safe vegetables and is maximizing profit by mixing ordinary vegetables with safe vegetables. The buyers make their decision about buying or not buying vegetables from the shop based on their own belief in the information supplied by the sellers. The results from numerical studies show that low credibility leads to limited efficiency of inspection activities. Raising credibility can make the whole society better off, including the sellers as well as the buyers. In addition, the ratio of safe vegetables as well as the total sale of genuinely safe vegetables will also increase. Hence, the paper calls for a trustworthy inspection system so that consumers can have higher trust in the credibility of the information they receive.
ISSN:1309-422X
2147-429X
DOI:10.1007/s40822-018-0093-5