The Role for Government in Differentiated Product Markets: Looking to Economic Theory

Sunding discusses how various product quality regulations can affect consumer welfare, and the likelihood and desirability of government intervention to regulate product qualities. Particularly in agricultural markets, product qualities can relate to production methods or other factors that are unrelated to consumptive characteristics but are better considered as affiliated public goods. Moreover, the fact that product quality regulations can affect affiliated public goods also changes the political-economic calculus of the legislative and rule-making process in that special interests that care about the public good can advocate for the intervention.