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Designing Food Safety Regulations: The Effect Of Inspection Policy And Penalties For Noncompliance On Food Processor Behavior

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  • Starbird, S. Andrew

Abstract

In the United States, federal, state, and local governments are involved with the regulation of the safety of the food supply. Food safety regulations that set standards for food processors usually include inspection policies for monitoring performance and penalties for processors who do not comply with regulatory standards. In this analysis, we examine how penalties and inspection policies interact to influence processor behavior. We distinguish between internal penalties (imposed by the regulator) and external penalties (imposed by the market or by the court). Using a model of the processor's expected annual cost, we find that under a given inspection policy internal penalties are only relevant under specific conditions. For cases in which internal and external penalties can be influenced, we use comparative statics to discover that internal penalties are more economically efficient for motivating processors than external penalties. These results imply that regulators should utilize internal penalties for noncompliance rather that rely on market or court-imposed penalties.

Suggested Citation

  • Starbird, S. Andrew, 2000. "Designing Food Safety Regulations: The Effect Of Inspection Policy And Penalties For Noncompliance On Food Processor Behavior," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(2), pages 1-20, December.
    • Handle: RePEc:ags:jlaare:30898
    DOI: 10.22004/ag.econ.30898
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    References listed on IDEAS

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    Cited by:

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    2. Mark R. Powell, 2013. "The Economic Efficiency of Sampling Size: The Case of Beef Trim Revisited," Risk Analysis, John Wiley & Sons, vol. 33(3), pages 385-396, March.
    3. Xin Su & Shengsen Duan & Shubing Guo & Haolong Liu, 2018. "Evolutionary Games in the Agricultural Product Quality and Safety Information System: A Multiagent Simulation Approach," Complexity, Hindawi, vol. 2018, pages 1-13, March.
    4. Ge, Houtian & Nolan, James & Gray, Richard & Goetz, Stephan & Han, Yicheol, 2016. "Supply chain complexity and risk mitigation – A hybrid optimization–simulation model," International Journal of Production Economics, Elsevier, vol. 179(C), pages 228-238.
    5. Zhou, Jiehong & Yue, Chengyan, 2010. "Investigating Chinese Vegetable Processing Firms’ Economic Incentives to Enhance Quality and Safety Controls," Journal of Food Distribution Research, Food Distribution Research Society, vol. 41(3), pages 1-12, November.
    6. Gaurav Bhattacharya, 2019. "Location decisions of industries in the presence of transportation costs and environmental regulations: empirical evidence from India," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 21(1), pages 24-53, June.
    7. Xia Tong & Wei Ding & Zhanfei Huang & Yutong Gu, 2024. "Governance mechanism of quality and safety of imported agricultural products in China based on grounded theory," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.
    8. Li, Kai & Zhou, Jie-hong & Liang, Qiao & Huang, Zuhui, 2015. "Food safety controls and governance structure varieties in China's vegetable and fruit sector," 2015 Conference, August 9-14, 2015, Milan, Italy 212046, International Association of Agricultural Economists.
    9. Ge, Houtian & Gray, Richard & Nolan, James, 2015. "Agricultural supply chain optimization and complexity: A comparison of analytic vs simulated solutions and policies," International Journal of Production Economics, Elsevier, vol. 159(C), pages 208-220.
    10. Beatty, Timothy & Shimshack, Jay P., 2018. "Monitoring and Enforcement in a Food Safety Context," 2018 Annual Meeting, August 5-7, Washington, D.C. 273913, Agricultural and Applied Economics Association.
    11. Mark R. Powell, 2014. "Optimal Food Safety Sampling Under a Budget Constraint," Risk Analysis, John Wiley & Sons, vol. 34(1), pages 93-100, January.
    12. Junqian Xu & Yuanyuan Wu, 2018. "A Comparative Study of the Role of Australia and New Zealand in Sustainable Dairy Competition in the Chinese Market after the Dairy Safety Scandals," IJERPH, MDPI, vol. 15(12), pages 1-24, December.
    13. Saak, Alexander E., 2003. "Identity Preservation And False Non-Gmo Labeling In The Food Supply Chain," 2003 Annual meeting, July 27-30, Montreal, Canada 22182, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    14. Henson, Spencer J. & Hooker, Neal H., 2001. "Private Sector Management Of Food Safety: Public Regulation And The Role Of Private Controls," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 4(01), pages 1-11.
    15. Brorsen, B. Wade, 2009. "Research: Are We Valuing the Right Stuff?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(01), pages 1-10, April.

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