Collective Voluntary Approaches to Food Safety with Heterogeneous Firms: Monitoring and Design?

Collective quality management systems are well known instruments to manage the quality and/or the safety of foodstuffs. They can be considered as voluntary approaches to food safety. In environmental economics some empirical studies emphasize that firms entering into a collective voluntary program behave differently because their motivations differ. To the best of our knowledge, there is no formal discussion on the effectiveness of a collective voluntary program in which firms adopt different behaviour once they entered the program. Starting from this two strand of literature, we extend the analytical framework of collective voluntary approaches considering heterogeneous firms and applying it to food safety issues. We show that according to firm's heterogeneity, in some situations increasing the number of inspections is useless and the effectiveness of the collective program is only reliant on its minimal requirements. We econometrically test our theoretical propositions on the case of the safety self-monitoring agreement, which exists on one of the most important import market of fresh produce in France. Our results lead us to discuss the design these new regulatory instruments and its relative cost-effectiveness from a societal point of view.