Welcome to the Club? An Economical Approach to Geographical Indications in the European Union

FRANK THIEDIG; BERTIL SYLVANDER

Published: 28.11.2000  〉 Heft 12/2000  〉 Resort: Articles 
Submitted: N. A.   〉 Feedback to authors after first review: N. A.   〉 Accepted: N. A.

ABSTRACT

The legal protection of geographical indications in form of the Council-Regulation (EEC) No. 2081/92 is one mainstay of the "new" European quality policy. This instrument is supposed to meet three objectives: answering the growing demand for products with identifiable geographical indication, securing higher incomes for producers and harmonizing the legal practises. The "Roman" (French and Italian) appellations of origin were used as a paradigm. In general four types of geographical names can be distinguished: generic indications, indications with full legal protection (like the appellation of origin), indications protected by competition law and individualized geographical indications. Geographical indications generally are collective name monopolies. Products with geographical indications dispose of an acquisitional potential. Thus, the price-sales curve will form a monopolistic gap. It is shown that monopolistic behaviour can be favourable and in some cases only monopolistic action might secure the supply. But the concept of firms forming one monopoly needs collective action. The club theory is a possibility to approach geographical indications by neo-classical economic theory. Producers form a club deriving benefits from sharing the geographical indication. They face costs in form of erection costs and exclusion costs. Especially the exclusion costs (control costs) raise questions on the ability of self-financing and indirect subsidies. Club theory can explain some of the empirical observations and factors of performance. To find explanations for the collective behaviour the theory of conventions is introduced. Conventions help to decrease transaction costs. But they differ crucially within the European member states and will lead to unavoidable misunderstandings. The definitive exclusivity of the instrument of the European quality policy (Council-Regulation EEC No. 2081/92) proclaimed by the European Commission pushes "northern" countries in a "Roman" system. This jeopardizes the quality conventions in the "northern" countries and endangers the acquisitional potential of the traditional "Roman" system.
CONTACT AUTHOR
Dipl.-Ing. agr. FRANK THIEDIG, Department für Wirtschafts- und Sozialwissenschaften der TU München, Alte Akademie 14, D-85350 Freising-Weihenstephan and Dipl.-Ing. agr. BERTIL SYLVANDER, Directeur de la recherche INRA-UREQUA (Unité de la Recherche sur l'économie des qualifications agro-alimentaires). 8, avenue Laennec, F-72000 Le Mans.
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