Certification of Pork Products

The objective of this paper is to provide insights on the welfare distributional impact on consumer and producer welfare resulting from the development and implementation of a credence certification program in the U.S. pork sector. The certification program can provide various levels of tracking and tracing in the marketing chain. The modeling framework follows that of Nilsson (2005), which encompasses product differentiation and substitution across meat products at the consumer level and across live animal types at the farm level. Processors and retailers have potentially bilateral market power and can supply either or both certified and conventional meat products. One of the key findings is that while as the conventional market contracts and the certified market expands as expected, the magnitude depends on whether suppliers are single-or multiproduct providers. On aggregate, total welfare increases by 15 to 24 percent depending on industry structure.