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Contract Selectivity, Food Safety, and Traceability

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Author Info
S. Andrew Starbird (Santa Clara University)
Vincent Amanor-Boadu (Kansas State University)

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Abstract

Contracts are an increasingly common method for coordinating exchange in the food industry. Contracts often include specifications for product attributes including food safety. One of the goals of explicit safety specifications is to discourage or deter suppliers who would deliver unsafe food. In this article, we use a principal-agent model in the context of adverse selection to examine how contracts that include traceability can be used to select against producers who cannot meet a processor's safety specifications. We find that the motivation to select against unsafe producers depends on the magnitude of the failure costs and the proportion of the failure costs allocated to producers. We also identify the conditions under which the processor selects against unsafe producers regardless of traceability. Our results are important to regulators and negotiators who want to support safe producers and deter unsafe producers.

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File URL: http://www.bepress.com/cgi/viewcontent.cgi?article=1141&context=jafio
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Publisher Info
Article provided by Berkeley Electronic Press in its journal Journal of Agricultural & Food Industrial Organization.

Volume (Year): 5 (2007)
Issue (Month): 1 ()
Pages: 1141-1141
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Handle: RePEc:bep:bjafio:v:5:y:2007:i:1:p:1141-1141

Note: oai:bepress:jafio-1141
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Related research
Keywords: contracts food safety traceability

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Goodhue, Rachael E, 2000. " Broiler Production Contracts as a Multi-agent Problem: Common Risk, Incentives and Heterogeneity," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 82(3), pages 606-22, August. [Downloadable!] (restricted)
  2. Chalfant, James A & Sexton, Richard J, 2002. " Marketing Orders, Grading Errors, and Price Discrimination," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 84(1), pages 53-66, February. [Downloadable!] (restricted)
  3. S. Andrew Starbird, 2005. "Moral Hazard, Inspection Policy, and Food Safety," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 87(1), pages 15-27, 02. [Downloadable!] (restricted)
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  1. repec:pra:mprapa:9550 is not listed on IDEAS
Statistics
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This page was last updated on 2008-11-19.

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