Product quality and environmental health issues in agricultural production

American agriculture is currently undergoing a transition from the production of commodities to the production of differentiated products. A major factor in the movement towards product differentiation is heightened consumer awareness of product quality issues and of the environmental health effects of alternative farming practices. This thesis examines several aspects of this process by analyzing the effectiveness of the information transfer from consumers, through downstream retailers, wholesalers, packers and processors, to upstream farm producers.;Chapter one addresses the question of how accurately the private market translates consumer preferences for environmental attributes into efficient changes in environmental quality. The paper explores the relationship between individuals' willingness to pay to avoid health risk and their voting behavior in referenda to ban activities that are the source of these risks. A model of voting behavior is developed that combines individual willingness to pay to avoid health risk with preferences for other environmental amenities associated with banning the polluting activity. Empirical results from a survey of consumer preferences for pesticide use indicate that while willingness to pay for reduced health risk is an important determinant of voting behavior, other factors such as concern for the environment and demographic characteristics also influence the voting decision.;The second chapter identifies signaling problems associated with information transfer and product identification in the agricultural sector. The paper shows that when product quality is not immediately verifiable, regulation may be necessary to prohibit firms from engaging in fraud. An incentive is identified for fraudulent products to be sold below the marginal cost of true premium products, which may potentially create adverse selection in the market for premium brands.;The final chapter examines the effect of farm supply shifts on concentration and market power in oligopsonistically-competitive processing industries. The model explains the empirical regularity of simultaneously increasing concentration and decreasing market power in the food processing sector. It is shown that a downstream processing industry is likely to become more highly concentrated, yet experience declines in market power, during periods of clockwise rotation in the farm supply curve.