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Waiting for the Invisible Hand: Novel Products and the Role of Information in the Modern Market for Food

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  • Trenton Smith
  • Hayley Chouinard
  • Philip Wandschneider

    ()
    (School of Economic Sciences, Washington State University)

Abstract

This paper places the modern spread of diet-related chronic disease in the United States within the context of more than a century of innovation in food processing technology, discovery in nutrition science, and corrective policy measures aimed at improving public health. We ask whether the current state of a airs represents a market failure, and if so what might be done about it. We argue that while today’s industrial food system has its advantages, the asymmetric information problems inherent to this system have resulted in a lemons-style break down in the market for processed foods. The appropriate policy response to such situations (namely, verifiable quality standards) is well known, but such policies are likely (in the short run) to reduce profit for existing large industrial producers of food. In light of the food industry’s long history of success at regulatory capture, we propose the formation of a new independent food standards agency devoted to protecting the interests of the American consumer.

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File URL: http://faculty.ses.wsu.edu/WorkingPapers/TSmith/wp2009-7.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2009-07.

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Length: 37 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:wsu:wpaper:tgsmith-4

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Keywords: credence goods; history; food policy; certification;

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References

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  9. Trenton G. Smith, 2004. "The McDonald’s Equilibrium. Advertising, empty calories, and the endogenous determination of dietary preferences," Social Choice and Welfare, Springer, vol. 23(3), pages 383-413, December.
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  16. Trenton Smith & Christiana Stoddard & Michael G. Barnes, 2007. "Why the Poor Get Fat: Weight Gain and Economic Insecurity," Working Papers 2007-16, School of Economic Sciences, Washington State University.
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Citations

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Cited by:
  1. Smith, Trenton G. & Tasnadi, Attila, 2012. "'Hidden Quality' in the History of American Food: Consumer Search vs. Industry Obfuscation?," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 125103, Agricultural and Applied Economics Association.
  2. Trenton G. Smith & Attila Tasnadi, 2013. "The Economics of Information, Deep Capture, and the Obesity Debate," Working Papers 1315, University of Otago, Department of Economics, revised Nov 2013.
  3. Chad M. Baum, 2013. "Mass-Produced Food: the Rise and Fall of the Promise of Health and Safety," Papers on Economics and Evolution 2013-03, Max Planck Institute of Economics, Evolutionary Economics Group.

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