COVER STORY
COVER STORY
Winter 2018 / Issue 56
Sustainable system of Geographical indications ( GI ) - Recognizable domestic wine and Quality assurance for the Consumers
Geographical indications ( GI ) are a special form of intellectual property rights ( IPR ) and at the same time part of the instruments of the European Agricultural Policy for the protection and sustainability of the quality of agricultural products . The main difference between GIs and other IPR rights is that GIs represent a collective protection system in which participants can be horizontally and vertically integrated . Their usage creates benefits for consumers and manufacturers by displaying information and guaranteeing quality ; stable profit margins for producers ; improved recognition ; access to new domestic and / or export markets ; promotion and brand building . The reasons for the use of geographical indications are primarily economic and are needed because of unregulated markets . One of the incentives for manufacturers to protect GIs should be to overcome a weak market position through standardized quality , based on the product ’ s specificity and type . These features enable the achievement of a price premium , which consumers pay for high quality , as well as avoiding asymmetry of information . The asymmetry of information can be overcome by creating a reputation , which is very important in conditions of imperfect information . This is a particularly important aspect for markets in countries with developing economies , where insufficiently developed knowledge and the preferences of consumers are due to the socio-economic conditions in the country . The advantage of marketing investments for guaranteeing a certain level of quality and improving the level of information can result in a timely recognition of the quality of the product by the consumer , which reduces
Marina Nacka , PhD , Assistant Professor , University “ Ss . Cyril and Methodius ”, Skopje , Faculty of Agricultural Sciences and Food Institute of Agricultural Economics
Motivation index for the use of geographical indications
the difference between the marginal costs and the realized price premium .
The information theory lists the asymmetry of information between the manufacturer and the consumer as a reason for market failure . This stems from the manufacturer ’ s knowledge of the characteristics of the product and the consumer ’ s insufficient knowledge and perception of the lack of easy access to information . Accordingly , the existence of an asymmetry of information on the market creates repercussions for manufacturers , consumers , and for the functioning of the market . From a consumer perspective , the consequences may be the risk that the product does not meet the consumer ’ s expectations and therefore the tendency to pay a higher price as an indicator of quality . From the aspect of market functioning , the consequences of the asymmetry of information can lead to a reduction in the quality of supply , the squeezing out of high-quality products from the market , and reducing the capabilities of consumers to meet their needs .
The implementation of a sustainable GI system is a control mechanism for sustainable product quality and consumer guarantee , thereby overcoming the asymmetry of information . The Republic of Macedonia faces the challenge of implementing the GI system in the agro-food sector . GIs have a particularly important role in the wine subsector due to the potential for producing high-quality wine as a result of favorable climatic and pedological conditions .
A research on the domestic market pointed to the motives for the protection of GIs among domestic wineries ( individual wineries who collectively approached the strategy for product differentiation through the formation of an association for the protection of the “ Vardar River Valley ” region ) by computing an index of motivation of the defined functions of geographical indications . The main motives for protecting geographical indications are to prevent the misuse and imitation of products and to build an individual or collective reputation , and to provide a guarantee to consumers .
14 AmCham Macedonia Magazine