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Do Inspection and Traceability Provide Incentives for Food Safety?

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Author Info

  • Starbird, S. Andrew
  • Amanor-Boadu, Vincent

Abstract

One of the goals of inspection and traceability is to motivate suppliers to deliver safer food. The ability of these policies to motivate suppliers depends on the accuracy of the inspection, the cost of failing inspection, the cost of causing a foodborne illness, and the proportion of these costs paid by the supplier. We develop a model of the supplier's expected cost as a function of inspection accuracy, the cost of failure, and the proportion of the failure cost that is allocated to suppliers. The model is used to identify the conditions under which the supplier is motivated to deliver uncontaminated lots. Surprisingly, our results show that when safety failure costs can be allocated to suppliers, minimum levels of inspection error are required to motivate a supplier to deliver uncontaminated lots. This result does not hold when costs cannot be allocated to suppliers. As a case study, we use our results to analyze the technical requirements for suppliers of frozen beef to the USDA's Agricultural Marketing Service.

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File URL: http://purl.umn.edu/10143
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Bibliographic Info

Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 31 (2006)
Issue (Month): 01 (April)
Pages:

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Handle: RePEc:ags:jlaare:10143

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Web page: http://waeaonline.org/
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Related research

Keywords: diagnostic error; food safety; inspection; sampling error; traceability; Food Consumption/Nutrition/Food Safety;

References

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  1. Chalfant, James A. & James, Jennifer S. & Lavoie, Nathalie & Sexton, Richard J., 1999. "Asymmetric Grading Error And Adverse Selection: Lemons In The California Prune Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(01), July.
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Citations

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Cited by:
  1. Rouviere, Elodie & Soubeyran, Raphael, 2012. "Small is Beautiful? Firm's Size, Prevention & Food Safety," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123410, Agricultural and Applied Economics Association.
  2. Bulut, Harun & Lawrence, John D., 2008. "Meat Slaughter and Processing Plants' Traceability Levels: Evidence from Iowa," Staff General Research Papers 12928, Iowa State University, Department of Economics.
  3. Souza Monteiro, Diogo M. & Caswell, Julie A., 2008. "Optimal choice of Voluntary traceability as a food risk management tool," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44394, European Association of Agricultural Economists.
  4. Cristina Grazia & Abdelhakim Hammoudi & Oualid Hamza, 2012. "Sanitary and phytosanitary standards: Does consumers’ health protection justify developing countries’ producers’ exclusion?," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 93(2), pages 145-170.
  5. Cristina Grazia & Abdelhakim Hammoudi & Oualid Hamza, 2012. "Sanitary and phytosanitary standards: Does consumers' health protection justify developing countries' producers' exclusion?," Post-Print hal-00939245, HAL.

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