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te, although there are numerous literatures on credence goods, only few actually discussed in relation to Halal products. Next chapter will discuss the literatures on credence products.

CHAPTER 3

3.0. Literature Review

This chapter is divided into five interrelated parts or sections. The first section provides a (general) glance on the studies or literatures on credence goods, which is applicable in the study of the market for Halal products. This is followed by the second section, of discussions on the demand for such goods. Market failure arises due to the nature of credence goods, which is discussed in the third section of this chapter. In the fourth section, a review on the solution of the market failure problem is examined. The final section deals with the issue pertaining to some of these solutions.

3.1. Credence Goods at a Glance

There are growing numbers of literatures on credence goods attribute since it was first mentioned by Darby and Karni in 1973. These literatures involve different assumptions which produce diverse outcomes. However, it is difficult to find economic literature that deals directly with Halal subject as a credence good. Nonetheless, studies on some of the credence goods can be applied to Halal concept.

Most literatures on credence goods assume that consumers are homogeneous. Hahn (2004) showed the contrast to this, in which the author grouped the consumers into two namely those who have some expertise or informed and those who do not or uninformed; This paper is slightly differs from that of Hahn (2004), where the consumers in this paper are also divided into two, namely Muslims (those who only consume Halal goods, or primary consumers) and non-Muslims. The latter is further grouped into two, ie. conventional consumers—who only consume non-Halal; and secondary consumers—who prefer to consume Halal products.

Some economists (such as McCluskey, 2000; Cho and Hooker, 2002) used game theory models on credence attribute to assess the interplays of stakeholders. These include whether producers decide to claim their products as those of high quality, then they have to decide whether to produce according to the claims or not. However, the use of game theory is out of the scope of this paper's analysis. Nonetheless, producers are assumed to produce what they intended to, without dishonesty.

Economists divide consumers' perception of food quality into a three attributes, namely: search, experience (which were pioneered by Nelson in 1970) and credence attribute (in Darby and Karni, 1973; Innes et. al., 2007; Umberger et. al., 2008). Search attributes can be determined from pre-consumption and at point of purchase such as colour, shape, brand and freshness. Experience attributes, arise from taste, juiciness, and food safety which could only be determined during or after consumption. Lastly, credence attributes refer to the process and production aspects, which the author claims that it cannot be determined before, during or after consumption of that particular food product (Umberger et. al., 2008). These food products, especially Halal as credence goods emphasise and maintain a strict quality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。