Asymmetric information problems occur because
food producers know whether they have
used the appropriate methods to achieve the desired
quality attributes, but consumers only know
with certainty what the producers’ quality claims
are or what the label says. The federal government
regulates food labels, but many quality claims go
unmonitored. Therefore, many quality-differentiated
food products present problems of imperfect
information, which may result in inefficient
market outcomes.
There are three classifications