Waiting for the Invisible Hand: Novel Products and the Role of Information in the Modern Market for Food
AbstractThis 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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Bibliographic InfoPaper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2009-07.
Length: 37 pages
Date of creation: Feb 2009
Date of revision:
credence goods; history; food policy; certification;
Other versions of this item:
- Smith, Trenton G. & Chouinard, Hayley H. & Wandschneider, Philip R., 2011. "Waiting for the invisible hand: Novel products and the role of information in the modern market for food," Food Policy, Elsevier, vol. 36(2), pages 239-249, April.
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
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