Geographical indications in the olive oil market: does social identity matter?

Geographical indications (GIs) are an important feature in many food markets. Their role is to protect consumers by providing information on the origin of the good, either informally or as regulated certified labels. Certified GIs (e.g. PDO) guarantee this information, increasing the likelihood of ex-post satisfaction. This paper contributes to the existing literature on GIs by observing that social identity makes the preferences for origin endogenous on utility. In particular, insiders (who share origin with the good) are expected to benefit of GIs more than outsiders (who share no origin with the good). The paper uses a contingent ranking survey administered to insiders (Sicilian olive oil to Sicilian consumers) and outsiders (Sicilian olive oil to non-Sicilian consumers) to test for the role of social identity. Stated willingness to pay (WTP) for GIs is then measured in different groups. Results indicate that insiders have a higher WTP for pure origin information compared to outsiders, but a general dislike of a regulated PDO label. Overall, acceptance of GIs among different groups changes with group membership.