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t between consumers and suppliers through labelling of credence attributes (Umberger et. al, 2008, pp. 5-6). However, the integrity of this labelling must be maintained otherwise, market failure would result. For instance, if private benefits from labelling exist (in such a way the products carry a Halal logo brings a premium in the market) but the cost of producing these attributes (maintaining Halal quality) are high, there could be incentives for producers to cheat by selling goods that are not up to Halal standards. These factors must also be considered by producers if they want to transform their production into Halal, as describe at the end of Chapter 4.

Monitoring can only eliminate cheating if it is fully effective. Anania and Nisticò (2003) provided a theoretical study on credence goods in which the incentive of low-quality producers to cheat depend on the level of effectiveness and credibility of public regulation in the provision of information to the consumers. Random inspections of high-quality would always reveal the true quality. Hence, if a producer of low-quality goods is caught faking the goods as of high-quality, hence a fine is imposed. Furthermore, in their model, the producers who had cheated would not be allowed to sell in the high-quality market, but the producers can still sell in the low-quality market where their products should belong. Since producers, in the analysis in Chapter 4, are assumed to be honest, the need for monitoring is eliminated.

3.5.2. Information Overload

Another limitation is the level of information itself. As mentioned earlier, provision of more information will alleviate inefficiency caused by asymmetric information. Nonetheless, too much information would hinder the improvement of informational asymmetry especially for food products with credence attribute. According to Caswell and Padberg (1992), producers perceive limited regulation on labelling as desirable for maximum flexibility, nonetheless, excessive freedom would be detrimental, which undermine the credibility of producers' communication, if it allows false claims. Selaun and Flores (2001, in Verbeke, 2005) pointed out that increasing amount of information on the label could overload the package, thus resulting consumers with limited time or ability to process such information to ignore the products resulting excess cost. Labelling in the analysis of this paper, is assumed to provides sufficient information and does not lead to information overload. The following Chapter 4 provides the economic analysis.

CHAPTER 4

4.0. Economic Analysis

The major assumptions in this analysis are as follows. Producer chooses either Halal (high-quality) or conventional (non-Halal or low-quality) products, and none of any combinations of the two types. For simplicity of analysis, the producers act honestly, ie. do not cheat by introducing fake labelling. The term labelling here also reflect the additional cost that would have been undergone by producers in producing or transforming into Halal production. Consumers on the other hand, perceive and trust the quality or types of goods exactly as informed by producers. In other words, information is perfect. Furthermore, it is assumed h本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。