Effects of mechanisms to reduce asymmetry of information and quality uncertainty on governance structures

Abstract

The occurrence of food contamination of higher severity associated with the more competitive business environment resulted in a higher attention regarding the quality and food safety as well as the adoption of public and private mechanisms to reduce information asymmetry and uncertainty on quality of food products. The predominance of attributes of experience and belief in food raise problems of asymmetric information between agents in a transaction and allow the selling of products with different qualities at similar prices, for example, thus hampering the market’s perception about real differences of product quality. Through literature review and secondary data, this paper presents the main mechanisms that have been adopted to minimize the mentioned problems, such as state intervention, trade mark, traceability, and certification. The adoption of these practices has caused changes in the forms of coordination of transactions between the agents of agri-food systems.