Regional agricultural products often trade at a premium because of the specific qualities of the place where they come from, traditional local skills, and networks. They are said to be traded in nested markets, i.e. segments of the wider market for that type of product. Examples are regional cheeses and wines. In a nested market, not only prices may be higher, but also transaction costs may be lower and development trends may differ from those in the wider market for wine or cheese. Regional specificities like wineroutes in France, Germany and other countries, Parmigiano-Reggiano cheese in Italy, and region brands like Waddengoud (Wadden gold) from the Wadden in the Netherlands are examples of nested markets.
The advantages which producers in such nested markets enjoy can be seen as a common-pool resource. In institutional economics, this is a semi-public good: a resource which is scarce (hence its users compete with each other), but users cannot be excluded. Hence the protection of such a resource requires some kind of public action, whether by an outside authority or by the community itself. Such action will protect the brand or logo which maintains the nested market; these brands, such as Chianti wine or Camembert cheese, are not individually owned but belong to the region.
A group of four Wageningen UR researchers (Nico Polman, Krijn Poppe and Jan-Willem van der Schans from LEI and Jan Douwe van der Ploeg from Wageningen University) recently published a paper on this topic in the Rivista di economia agraria. Their analysis suggests that European agriculture is not so much a multifunctional agriculture producing public goods, but a region-based common-resource agriculture. This does not call for subsidising public goods that are produced anyway but for investing in common-pool resources with nested markets that are specific of place and networks.