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Optimal Sharing of Foodborne Illness Prevention between Consumers and Industry: The Effect of Regulation and Liability

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  • Brian Roe
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    Abstract

    Consumers and the food industry can both prevent foodborne illness. Two questions are explored: what is the socially optimal level of preventative effort by each and can tort and regulatory instruments induce such behavior? Analysis is complicated by two aspects of food safety technology: one party's effort can affect the marginal effectiveness of the other party's effort and damage functions can be nonconvex. Previous analysis of accidents under torts and regulation fails to consider these generalizations. Indeed, results concerning the ability of tort and regulatory instruments to induce first-best and second-best behavior often contradict previous results in the literature. Copyright 2004, Oxford University Press.

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    File URL: http://hdl.handle.net/10.1111/j.0092-5853.2004.00584.x
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    Bibliographic Info

    Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

    Volume (Year): 86 (2004)
    Issue (Month): 2 ()
    Pages: 359-374

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    Handle: RePEc:oup:ajagec:v:86:y:2004:i:2:p:359-374

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    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.:
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    1. Schmitz, Patrick W., 2000. "On the joint use of liability and safety regulation," International Review of Law and Economics, Elsevier, vol. 20(3), pages 371-382, September.
    2. Shogren, Jason F. & Crocker, Thomas D., 1999. "Risk and Its Consequences," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 44-51, January.
    3. John M. Antle, 2000. "No Such Thing as a Free Safe Lunch: The Cost of Food Safety Regulation in the Meat Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 310-322.
    4. 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.
    5. Emons, Winand & Sobel, Joel, 1991. "On the Effectiveness of Liability Rules when Agents Are Not Identical," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 375-90, April.
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    Cited by:
    1. Beckmann, Volker & Soregaroli, Claudio & Wesseler, Justus, 2009. "Ex-ante regulation and ex-post liability under uncertainty and irreversibility: governing the coexistence of GM crops," Economics Discussion Papers 2009-53, Kiel Institute for the World Economy.
    2. Bhole, Bharat & Wagner, Jeffrey, 2008. "The joint use of regulation and strict liability with multidimensional care and uncertain conviction," International Review of Law and Economics, Elsevier, vol. 28(2), pages 123-132, June.
    3. Teisl, Mario F. & Roe, Brian E., 2010. "Consumer willingness-to-pay to reduce the probability of retail foodborne pathogen contamination," Food Policy, Elsevier, vol. 35(6), pages 521-530, December.
    4. Hussain, Salman, 2006. "Co-regulation and voluntarism in the provision of food safety: lessons from institutional economics," Working Papers 45996, Scotland's Rural College (formerly Scottish Agricultural College), Land Economy & Environment Research Group.
    5. S├ębastien Pouliot & Daniel A. Sumner, 2008. "Traceability, Liability, and Incentives for Food Safety and Quality," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(1), pages 15-27.
    6. Hussain, Salman, 2006. "Co-regulation and voluntarism in the provision of food safety: lessons from institutional economics," Working Papers 45996, Scottish Agricultural College, Land Economy Research Group.
    7. Jonathan Yoder, 2005. "Liability, Regulation And Endogenous Risk: Incidence And Severity Of Escaped Prescribed Fires In The United States," Law and Economics 0506003, EconWPA.
    8. Jonathan Yoder, 2008. "Liability, Regulation, and Endogenous Risk: The Incidence and Severity of Escaped Prescribed Fires in the United States," Journal of Law and Economics, University of Chicago Press, vol. 51(2), pages 297-325, 05.

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