Rent Seeking and Political Economy of Geographical Indication Foods

Protected Designation of Origin and Protected Geographical Indication are European labeling regulations aimed at protecting names of origin and traditional methods of production of specialty foods. Property rights on these marks are allocated, by a public authority, to a specific area. However, the size of the protected area is hardly defined solely on technical characteristics, rather it is often an issue of political debate among different stakeholders (producers and consumers). This paper aims at investigating the bargaining process leading to the definition of a Geographical Indication area. Drawing on historical evidence from three cases, we build a three-stage Political Economy Model in which the size of the protected area is endogenously determined. The resulting politically optimal area is compared to the social optimum. Results show that lobbying strength, quantity supplied, and market potential play an important role in explaining deviations from the social optimum