Determinants of Adoption of Protected Designation of Origin Label: Evidence from the French Brie Cheese Industry

This paper investigates empirically the determinants of agro-food firms' adoption of the Protected Designation of Origin (PDO) label. A unique dataset containing firm-level cost and production information on the French Brie cheese is used, covering the period 1980-2000. The Brie cheese data are especially relevant as PDO Brie producers have coexisted with other non-PDO producers since 1981. To evaluate the producers' incentive to opt for PDO certification, we use a structural switching regression model which incorporates cost and production structure variables. Results show that PDO certification is less attractive the higher the costs of raw materials and the greater the size of the company. PDO Brie cheese production costs are estimated to be on average 40% higher than those for non-PDO Brie. The PDO production process could be technically inefficient when compared with the unconstrained non-PDO manufacturing; yet, PDO producers benefit from a price premium on their product which offsets their higher production cost.