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ere that producers produce homogenous products and that some or all of the conventional products aretransformable into Halal products (by following the Syariah compliant methods hence obtaining Halal logo as discussed in previous chapters).

The welfare effects from introducing labelling, indicated by the consumers and producers surpluses, are briefly concluded at the end of this chapter. It is necessary to point out that the combinations of consumer types are different in each of the analysis. These types of consumers (interactions) can be illustrated as the following Diagram 2 below. The next Section 4.1. provides a basic foundation for the analysis. Subsequently, sub-section (4.1.1) only considers the left-side and the overlapped oval areas of the diagram below. An analysis with the inclusion of the right-side of the diagram is provided in sub-section (4.1.2). On the other hand, Section 4.2. only deals with the right-side and also the overlapped oval areas of Diagram 2.

4.1. Basic Model

Studies by Hoehn and Deaton (2004) provided a foundation that can be applied into modelling of Halal (credence) products. Here, it can be assumed that all of the products are transformable. Following their analysis, the demand for conventional (non-Halal) products at a given price and at the absence of Halal logo is,

(1)where is the demand for conventional products, is the demand intercept, is the slope of demand absolute value, is the price of conventional good. Hence, implies as the conventional product quantity demanded is a function of the price of conventional product. Here, equation (1) is referred as unconditional demand for conventional product.

(2)The reservation price schedule for conventional product is the inverse of Equation (1), thus,where and corresponds to the reservation price as a function of quantity of unconditional conventional product. On the other hand, the unconditional demand for Halal product is therefore.

(3)where is the willingness to pay (hereafter, WTP) by consumer for the (Halal) ‘credence attribute' per unit of the Halal product, which varies from zero to other positive value depending on consumer perception (eg. studies by Kola and Latvala, 2003). For simplicity of the analysis, is a real positive value and larger than zero, ie.. It can be considered that as the level of WTP for the marginal consumer, whose reservation price is just equal to the marginal cost of Halal producers.

According to Hoehn and Deaton (2004), in some cases the share of consumers with positive WTP is small compared to the quantity supplied of credence good. Their model consider this as a special case of market saturation in which at the point of price determination for credence good involves WTP equalling zero, ie. , when quantity supplied is more than threshold quantity , specificall本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。