The Economics of Ecolabelling - SEAFOOD Ecolabelling: Principles and Practice - page 41

buy and consume them - for seafood, nutritional content, safety and sustainability
are all examples of credence characteristics. In this case, we truly have an imper-
fect market because first, there is asymmetry in possession of knowledge between
producer and consumer, and second, it is not practical for consumers to assess the
quality of the product. It is impractical or impossible for consumers to perform lab-
oratory tests for the safety and nutritional value of seafood they purchase. Similarly,
in general, it is not feasible for the consumer to observe the production process to
determine if the product came from a sustainable fishery or was produced under
best practices in an aquaculture facility, even if the consumer was equipped with the
technical knowledge required to make such a judgement. Labelling can transform
credence attributes to search attributes that allow the consumer to judge the quality
of the good before purchase.
For credence goods, one may rely on producer claims, but generally consumers
place more trust in an independent third party to provide truthful information to
the consumer on quality. In this case, either a third-party private certification may
be used, or there may be government regulations requiring that certain product
characteristics be revealed to the consumer by means of government testing or
inspections.
2.2.2 Demand for attributes
Recognising that attributes have value to consumers, Lancaster (1971) characterised
products as a bundle of attributes, where each good has one or more attributes, and
specified the analysis as one of consumer demand for a bundle of attributes rather
than a bundle of goods. The essence of Lancaster's framework is that a good by
itself does not yield satisfaction, but it possesses characteristics (attributes) that
define it. Therefore, there is a demand for attributes in the marketplace. Lancaster's
work has been the underlying theory which is used as justification for much of
the economic analysis of evaluating consumers' preferences for seafood safety
(Wessells & Anderson 1995, Wessells et al . 1996), seafood ecolabelling (Wessells
et al . 1999b, Jaffry et al . 2004) and seafood production methods (Holland &
Wessells 1998). By viewing the characteristics of a seafood product as quality,
safety, price, production process, taste, colour, etc., the marginal value of each of
these attributes to the consumer can be evaluated.
Consumers' willingness to pay for various amounts of attributes per unit of food
reflects their perceptions of the benefits they will receive from those attributes
(Caswell 1998) and varies depending upon a number of factors. For example,
willingness to pay may be higher for consumers with higher income levels and lower
for consumers with lower income levels. Other factors that may influence demand
for attributes include other socio-economic and demographic characteristics of
consumers.