Consumers' Valuation of Geographical Indication‐Labeled Food: The Case of Hom Mali Rice in Bangkok*

• Published date: 01 March 2020
• Author: Rodolfo M. Nayga,Ji Yong Lee,Orachos Napasintuwong,Noppawong Pavasopon
• Date: 01 March 2020
• DOI: http://doi.org/10.1111/asej.12196

Consumers’Valuation of Geographical

Indication-Labeled Food: The Case of Hom Mali

Rice in Bangkok*

Ji Yong Lee, Noppawong Pavasopon,

Orachos Napasintuwong and Rodolfo M. Nayga Jr

Received 3 December 2018; Accepted 18 January 2020

This study investigated consumers’valuation of geographical indication (GI) and

protected geographical indication (PGI)-labeled rice in Bangkok using a non-

hypothetical experimental auction in a field setting. We also examined the effects

of sequentially providing information about geographical indications on product

valuation. The results suggest that consumers are willing to pay premiums for rice

with geographical certifications, with the highest premium for the rice with both

GI and PGI certifications. The provision of detailed information about the geo-

graphical indications further increases the premiums. However, consumers suffer a

welfare loss under the current high market prices for rice with geographical certi-

fications. A price reduction of approximately 10 percent would be needed to gain

consumer welfare from the introduction of GI and PGI certification.

Keywords: consumer valuation, geographical indication, protected geographical

indication, information effect, Jasmine rice, rice quality.

JEL classification codes: C93, D12, Q13.

doi: 10.1111/asej.12196

I. Introduction

The primary objectives of food labeling are to provide product information to

consumers and to help them make informed purchasing decisions that could

*Lee: Department of Agricultural and Resource Economics, Kangwon National University,

205 College of Agriculture and Life Sciences Building 3, Chuncheon-si, Gangwon-do 24341,

Republic of Korea. Pavasopon: Department of Agricultural and Resource Economics, Center for

Advanced Studies for Agriculture and Food, Kasetsart University Institute for Advanced Studies,

Kasetsart University, Bangkok 10900, Thailand. Napasintuwong (corresponding author): Department

of Agricultural and Resource Economics, Kasetsart University, Center for Advanced Studies for

Agriculture and Food, Kasetsart University Institute for Advanced Studies, Kasetsart University,

Bangkok 10900, Thailand. Email: orachos.n@ku.ac.th. Nayga, Jr: Department of Agricultural Eco-

nomics and Agribusiness, University of Arkansas, 217 Agriculture Building, University of Arkansas,

Fayetteville, AR 72701, USA. This work waspartially supported by the Center for Advanced Studies

for Agriculture and Food, Institute for Advanced Studies, Kasetsart University Under the Higher

Education Research Promotion and National Research University Project of Thailand, Office of the

Higher Education Commission, Ministry of Education, Thailand.

© 2020 East Asian Economic Association and John Wiley & Sons Australia, Ltd

Asian Economic Journal 2020, Vol.34 No. 1, 79–96 79

facilitate the resolution of market failure caused by asymmetric information

(Akerlof, 1970) regarding the supply of high-quality agricultural products. It

could also minimize consumers’search costs by reducing the possibility of

choice confusion among many heterogeneous food products (Landes and

Posner, 1987). For producers, the provision of food labeling with quality infor-

mation differentiates their products from competing products and it could also

offer them an opportunity to obtain premium prices (Deselnicu et al., 2013).

Among the many food labels, one particular label that has recently received con-

siderable attention in consumer studies is the geographical indication (GI) label

(Loureiro and McCluskey, 2000; Bonnet and Simioni, 2001; Teuber, 2010;

Menapace et al., 2011; Aprile et al., 2012). The motivation of these studies

comes from the recognition that consumers care about social or ethical proper-

ties of food products, reflected by, for instance, the production region and pro-

duction methods (Briggeman and Lusk, 2010).

The interest in using geographical information in food product labeling have

significantly increased in Europe following the recognition of a distinct form of

intellectual property rights in the TRIPS agreement of the WTO in 1994

(Josling, 2006). Geographical indication labels (e.g. geographical indication

(GI) and protected geographical indication (PGI)) provide both the origin infor-

mation and the origin-associated quality of food products. The GI label repre-

sents an identification of food products with a particular geographic region and,

thus, provides the ability to trace those products to their regions. Moreover,

labels with geographical information were originally developed to promote the

recognition of unique and distinct-quality agricultural products and, thus, pro-

vide product quality information to consumers.

Several previous studies have shown that geographical information supplied

with food products can influence consumers’food choices. Examp les are stud-

ies about geographical information in products such as olive oil (Menapace

et al., 2011; Aprile et al., 2012), wine (Mtimet and Albisu, 2006; Teuber,

2011), cheese (Bonnet and Simioni, 2001), and meat (Loureiro and

McCluskey, 2000). A potential important reason for the geographical informa-

tion being provided with food is that that the geographical indication may

assure consumers of the high quality of food products. Several empirical stud-

ies have examined the effect of ge ographical infor mation on consume r food

choices, but most of these studies have been conducted in developed countries.

There is scant info rmation on the value of g eographical infor mation in food

products in developing countries. This is an important gap in the literature

because a geographical indication label could be adopted in developing coun-

tries to further improve the livel ihood of farmers, g iven that it is a tool tha t can

be used to identify the exceptional quality of agricultural products, maintain

the sustainability of a defined indigenous production region, and support the

development of rural communities (Rangnekar, 2004; Jena and Grote, 2010).

The first contribution of this study is, thus, to consider the use of a geographi-

cal indication label for consumers in a developing country (i.e. Thailand). In

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