Lack of Credibility in Food Markets - Driving Medium Quality Food Out of the Market

Some food markets are dominated by high quality and standard quality segments, whereas me-dium quality products are almost absent. A modeling framework with asymmetric information regard-ing true quality of the products and the resulting lack of consumer confidence is presented. Uncer-tainty regarding the quality of alleged medium quality products provides certain consumer groups to divert consumptions away from medium quality to either standard or high quality products. These countervailing incentives explain the missing medium quality products. Empirical examples are given to motivate the model.