Quality Certification by Geographical Indications,Trademarks and Firm Reputation

We develop a reputation model to study the concurrent use of trademarks and certification for foodproducts with a regional identity, known as geographical indications (GIs). The model extendsShapiro’s (1983) approach to modeling reputation to a situation in which two technologies for theproduction of quality are available, one of which is available only in the GI region and has a costadvantage for the production of higher quality levels. In this setting, trademarks capture firmspecificreputations whereas GI certification captures a notion of collective reputation. The modelshows that GI certification improves the ability of reputation to operate as a mechanism for assuringquality when it is linked to some inherent attributes of a particular production area. We discuss somewelfare implications of introducing GI certification and show that an EU-style sui generis GIcertification is preferable to the US-style approach based on certification marks.[...]