WIPO Journal - World Intellectual Property Organization

minimum quality standards for regional and specialty products such as Washington apples. Starting from
the well-established position that producers have no incentive to invest in product quality/brand recognition
when there is no entry control, Lence et al. examine the welfare implications of alternative legal approaches
to joint supply control. 13 Considering a range of control approaches ranging from perfect competition
through monopoly and including options to control only land area or production practices or both, they
show, in line with general theory, that the incentive to establish a GI-type system increases with the strength
of the property right system. That is, the stronger the property rights the more supply control is possible
and the higher prices can be maintained. From this recognition have arisen the proposals for enhancing
GI legislation multilaterally.
Merel investigates the economic rationale underlying control mechanisms in European protected
designations of origin (PDO—this is a form of GI defined in the EU law and is very specific and restrictive
in nature), with a focus on the French Comté cheese market. 14 The author shows that vertical integration
between upstream producers and downstream processors is mutually beneficial as long as the integrated
industry is able to exercise some degree of seller market power. This argument provides a potential rationale
to government sanctioned production control scheme currently in place. Moschini et al. focus on the
production of high quality products with GIs serving as a source of quality information for consumers 15 ;
Roquefort for example is a particularly select type in the broad class of blue cheeses. The authors show
under these circumstances that a competitive equilibrium can exist but is not Pareto efficient—overall
benefits can still be enhanced—when the costs of certification are borne by producers. As a consequence,
high quality goods are under-supplied. With enhanced product information and a competitive equilibrium,
most benefits are captured by consumers. Producers are benefited only to the extent they control inelastically
provided input—those which cannot be enlarged with rising prices and profitability, such as land. These
findings are in agreement with general economic theory that the least elastic element in the supply/demand
equilibrium receives the greatest share of benefits.
Empirical models
The Economic Effects of Geographical Indications on Developing Country Producers 161
Carter et al. use a case study approach to highlight the conditions necessary for a successful
geographical-origin branding strategy for farm produce in the United States. 16 The paper argues that the
use of geographic identifiers to achieve product differentiation is viable, but is unlikely to benefit local
producers. Giovannucci et al. measure the success of a GI as the proportion of stakeholders receiving
economic benefits. 17 They note the significance of delineating the region, which may lead to conflicts
among potential stakeholders or incorporate areas not suited to the quality associated with the product.
At best, GI development is measured in decades, and benefits can be negative with little product
differentiation and high costs. At best, small, and certainly lower quality, producers can be excluded from
any benefits. With our economic model, we attempt to identify which group will benefit from a GI before
it is established.
13 S.H. Lence, S. Marette, D.J. Hayes and W. Foster, “Collective Marketing Arrangements for Geographically Differentiated Agricultural Products:
Welfare Impacts and Policy Implications” (2007) 87 American Journal of Agricultural Economics 947.
14 P. Merel, “Efficiency and Redistribution in the French Comté Cheese Market”, paper presented at the I Mediterranean Conference of Agro-Food
Social Scientist, Barcelona, Spain (April 23–25, 2007), at http://ageconsearch.umn.edu/bitstream/9396/1/sp07me06.pdf [Accessed March 28, 2011].
15 G.C. Moschini, L. Menapace and D Pick, “Geographical Indications and the Competitive Provision of Quality in Agricultural Markets” (2008)
90 American Journal of Agricultural Economics 794.
16 C. Carter, B. Krissoff and A.P. Zwane, “Can Country-of-origin Labeling Succeed as a Marketing Tool for Produce? Lessons from Three Case
Studies” (2006) 54 Canadian Journal of Agricultural Economics 513.
17 D. Giovannucci et al., Guide to Geographical Indications: Linking Products and Their Origins (Geneva: International Trade Centre, 2009), at
http://www.intracen.org/publications/Free-publications/Geographical_Indications.pdf [Accessed March 28, 2011].
(2011) 2 W.I.P.O.J., Issue 2 © 2011 Thomson Reuters (Professional) UK Limited