The value of third-party certification claims

at Iowa's feeder cattle auctions

The majority of U.S. feeder cattle are sold through auction markets. While auctions are very efficient at bringing buyers and sellers together for price discovery, signaling the value of cattle at auctions framework is often a challenge. Buyers cannot assess the quality of cattle at a low cost, and sellers have incentive to overstate the condition of their animals.

Third-party programs, such as state-sanctioned green or gold tag preconditioning programs, have the potential to mitigate this problem. This study looks at the value of third-party certification claims by collecting data from 105 sales, which took place in nine markets in 2005-06.

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