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Welfare Effects of Mandatory Traceability When Firms are Heterogeneous

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  • Pouliot, Sebastien

Abstract

We develop a framework in which the cost of producing a quantity food and the cost of food safety differs across firms. We show that large firms may supply the safest food even though small firms have a cost advantage in producing safe food. The model shows that mandatory traceability can decrease the overall safety of food when small firms that supply the safest food exit the industry. Our model applies to food safety but can be applied to a wide range of issues related to regulation and product quality.

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File URL: http://purl.umn.edu/61017
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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado with number 61017.

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Date of creation: Apr 2010
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Handle: RePEc:ags:aaea10:61017

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Related research

Keywords: Food safety; quality; traceability; regulation; Industrial Organization; Marketing; Production Economics; D21; L11; L15; Q10;

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References

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  1. Crespi John M. & Marette Stephan, 2009. "Quality, Sunk Costs and Competition," Review of Marketing Science, De Gruyter, vol. 7(1), pages 1-36, August.
  2. Steven Berry & Joel Waldfogel, 2003. "Product Quality and Market Size," NBER Working Papers 9675, National Bureau of Economic Research, Inc.
  3. Dickinson, David L. & Bailey, DeeVon, 2002. "Meat Traceability: Are U.S. Consumers Willing To Pay For It?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(02), December.
  4. Pouliot, Sebastien & Sumner, Daniel A., 2010. "Traceability, Liability, and Incentives for Food Safety and Quality," Staff General Research Papers 32126, Iowa State University, Department of Economics.
  5. Winfree, Jason A. & McCluskey, Jill J., 2003. "Collective Reputation And Quality," 2003 Annual meeting, July 27-30, Montreal, Canada 21927, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. Hobbs, Jill E., 2004. "Traceability in the Canadian Red Meat Sector," Economic and Market Information 55304, Agriculture and Agri-Food Canada.
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