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Designing Food Safety Regulations: The Effect Of Inspection Policy And Penalties For Noncompliance On Food Processor Behavior

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  • Starbird, S. Andrew
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    Abstract

    In the United States, federal, state, and local governments are involved with the regulation of the safety of the food supply. Food safety regulations that set standards for food processors usually include inspection policies for monitoring performance and penalties for processors who do not comply with regulatory standards. In this analysis, we examine how penalties and inspection policies interact to influence processor behavior. We distinguish between internal penalties (imposed by the regulator) and external penalties (imposed by the market or by the court). Using a model of the processor's expected annual cost, we find that under a given inspection policy internal penalties are only relevant under specific conditions. For cases in which internal and external penalties can be influenced, we use comparative statics to discover that internal penalties are more economically efficient for motivating processors than external penalties. These results imply that regulators should utilize internal penalties for noncompliance rather that rely on market or court-imposed penalties.

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    Bibliographic Info

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

    Volume (Year): 25 (2000)
    Issue (Month): 02 (December)
    Pages:

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    Handle: RePEc:ags:jlaare:30898

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

    Keywords: Food Consumption/Nutrition/Food Safety;

    References

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    1. Ewerhart, Christian & Schmitz, Patrick W., 1998. "Ex Post Liability for Harm vs. Ex Ante Safety Regulation: Substitutes or Complements? Comment," MPRA Paper 13448, University Library of Munich, Germany.
    2. Laurian J. Unnevehr, 1996. "The Benefits and Costs of Food Safety Policies: Discussion," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 78(5), pages 1302-1304.
    3. Kolstad, Charles D & Ulen, Thomas S & Johnson, Gary V, 1990. "Ex Post Liability for Harm vs. Ex Ante Safety Regulation: Substitutes or Complements?," American Economic Review, American Economic Association, vol. 80(4), pages 888-901, September.
    4. Julie A. Caswell & Jaana K. Kleinschmit v. L., 1997. "Using Benefit-Cost Criteria for Settling Federalism Disputes: An Application to Food Safety Regulation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 79(1), pages 24-38.
    5. James M. MacDonald & Stephen Crutchfield, 1996. "Modeling the Costs of Food Safety Regulation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 78(5), pages 1285-1290.
    6. Tanya Roberts & Jean C. Buzby & Michael Ollinger, 1996. "Using Benefit and Cost Information to Evaluate a Food Safety Regulation: HACCP for Meat and Poultry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 78(5), pages 1297-1301.
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    Cited by:
    1. Saak, Alexander E., 2003. "Identity Preservation And False Non-Gmo Labeling In The Food Supply Chain," 2003 Annual meeting, July 27-30, Montreal, Canada 22182, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Henson, Spencer J. & Hooker, Neal H., 2001. "Private Sector Management Of Food Safety: Public Regulation And The Role Of Private Controls," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 4(01).
    3. Brorsen, B. Wade, 2009. "Research: Are We Valuing the Right Stuff?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, Western Agricultural Economics Association, vol. 34(1), April.
    4. Zhou, Jiehong & Yue, Chengyan, 2010. "Investigating Chinese Vegetable Processing Firms’ Economic Incentives to Enhance Quality and Safety Controls," Journal of Food Distribution Research, Food Distribution Research Society, Food Distribution Research Society, vol. 41(3), November.

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