Public Labeling Revisited: The Role of Technological Constraints Under Protected Designation of Origin Regulation
This paper takes into account technological and output constraints for firms to analyse PDO regulation. We first examine an original dataset of French Brie cheese producers and compare the cost structure of PDO producers with non-PDO ones. The paper also finds that PDO firms face a more costly production technology and do not profit from scale economies. Then, based on a theoretical model, the paper shows a clear tradeoff between the sunk advertising costs (net of certification costs) and the degree of diseconomies of scale. This tradeoff affects both the firms' incentive to certify, and the efficiency of public certification.
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