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The Strategic Use of Private Food Safety Standards to Manage Complexity: a Moral Hazard Perspective

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  • Russo, Carlo
  • Perito, Maria Angel
  • Di Fonzo, Antonella

Abstract

Private food safety standards (PFSS) are widely adopted by firms in the agri-food system, as they meet an increasing consumer demand for safety and quality. Yet, recent economic literature found that PFSS might serve other purposes than just ensuring food safety. Our paper contributes to this literature, framing PFSS within a contract-theory model. We conclude that PFSS can be used to lower the coordination costs along the supply chain and that their effects go beyond ensuring the production of quality and safety attributes. The model shows that PFSS can reduce the cost of solving moral hazard problems for non-discriminating buyers facing heterogeneous suppliers.

Suggested Citation

  • Russo, Carlo & Perito, Maria Angel & Di Fonzo, Antonella, 2014. "The Strategic Use of Private Food Safety Standards to Manage Complexity: a Moral Hazard Perspective," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182795, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae14:182795
    DOI: 10.22004/ag.econ.182795
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