Competition and Credibility of Private Third-party Certification in International Food Supply

Abstract : With globalization a number of international food standards and certification systems emerged in in modern food supply chains. Third-party certifiers are critical institutions and play a pivotal role on quality assurance and they provide sound and reliable information on product's quality and safety attributes. Private certification systems can only provide credible market signals if they are objective and independent. This paper investigates the potential implications of increasing certifier's competition on the credibility of private food standards. Our results indicate that increasing economies of scale and certifier market shares are important determinants of third-party certifier competition.