include more information about the origin of a product, aimal welfare and other properties connected
with a production process. Throug these systems more information about credence characteristics of
beef safety and quality will be available to consumers. However, benefits of additional food safety and
quality information to consumers are not adequately well studied.
This study attempts to meet this demand for additional research by finding out whether
consumers are willing to pay for additional information about beef quality and safety. Consequently,
the aim of this study is to evaluate, both qualitatively and quantitatively, the value of new information
about and the information systems set for credence characteristics of beef. Economics of information
is employed as the theoretical framework. The quantitative approach focuses to measure the ex ante
value of credence characteristics, and the method of contingent valuation is applied for this purpose.
2. Information and market functioning
Consumers lack information about quality properties of most goods on the market. Within the
economic framework the information problems on the market were studied as early as 1970, when
Akerlof showed that markets fail in the presence of information asymmetry. He argued that bad
quality ultimately drives out good quality from the market, if information asymmetry exists between
sellers and buyers. If quality cannot be signaled, good quality products cannot get a price premium
and, accordingly, only bad quality products will be offered for sale (Akerlof 1970).
Becker (2000) applies this example to the functioning of the meat market. In today’s meat chain
the raw material is purchased from further and further away, which means that information on the
characteristics of the meat is not available in the same way as earlier, when it was bought directly from
the local producers. The production of high quality foodstuffs costs more, and if there is no additional
price for higher quality on the market, the quality will deteriorate, and only lower quality products
enter the markets. This means that the quality of the products in the consumption is also weaker.
However, the consumers might be willing to pay more for higher quality, thus compensating for the
higher production costs, if the differences in the quality were efficiently communicated to the
consumers.
Important progress was made when goods were categorized into search, experience and credence
quality attributes on the basis of how consumers can evaluate the quality aspects of products (Nelson
1970, Darby and Karni 1973). A search good is one whose quality is determined before purchase, an
experience good is one whose quality is determined after purchase, and quality of a credence good
cannot be determined either before or after the purchase. Many of the characteristics relating to the
safety of foodstuffs are classified as credence quality attributes, because it is difficult for the
consumers to assess them by themselves. In order to obtain more information on them, they have to
rely on the seller or outside observers (Andersen 1994). In the case of food risks that can only be
found in the long term, it is very difficult to establish the connection between the quality of the
original food product and the illness it may have caused (Henson ja Traill 1993).
Based on the above classification, Becker (2000) highlights the costs due to the need to acquire
more information. The costs are the lowest in the case of quality attributes that are based on external
observation, which are available through the senses. Assessing the quality of an experience good in
advance involves high costs, but these attributes can be assessed quite easily and at low cost in
connection with or after the use. However, in the case of credence attributes the assessment of the
quality involves high costs both before and after the consumption.
The availability of quality information is very important for the functioning of the market.
Markets function quite well in terms of characteristics based on external observation and, to some
extent, experience quality attributes. This is because consumers learn about quality after using the
product. However, both private and public measures are needed for the markets to function properly in
terms of the credence quality attributes in order to guarantee availability and quality of the necessary
information (Caswell ja Mojduszka 1996).
As stated above, food safety is usually defined as a credence attribute since consumers cannot
measure quality and cannot learn it through his or her experience of consuming the product (Henson
and Traill 1993). Such quality properties included in this study are environmental impacts, animal