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A general equilibrium analysis of food industry considering the food quality

Author

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  • Pu-Yan NIE

    (Institute of Industrial Economics and Institute of Resources, Environment & Sustainable Development, Jinan University, Guangzhou, P.R. China)

  • You-Hua CHEN

    (College of Economics and Management and Guangdong Center for Rural Economic Studies, South China Agricultural University, Guangzhou, P.R. China)

Abstract

By establishing a dynamic equilibrium model, the paper analyses the equilibrium of the food industry and the equilibrium about the food quality as well as quantity is achieved. Firstly, the study examines the effects of competitions on the price, outputs, profits and social welfare. The authors argue that competition reduces the food quality. Secondly, this paper shows that consumers benefit from the quality regulation while producers undertake a loss. Moreover, social welfare first increases then decreases with the regulation. Thirdly, the optimal quality regulation is presented and a higher quality regulation reduces competition, while the lower quality regulation promotes it. Finally, the effects of fixed costs on the equilibrium number of firms in the corresponding industry are captured.

Suggested Citation

  • Pu-Yan NIE & You-Hua CHEN, 2014. "A general equilibrium analysis of food industry considering the food quality," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 60(7), pages 301-308.
    • Handle: RePEc:caa:jnlage:v:60:y:2014:i:7:id:115-2013-agricecon
    DOI: 10.17221/115/2013-AGRICECON
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    References listed on IDEAS

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    1. Roberta Sebastiani & Francesca Montagnini & Daniele Dalli, 2013. "Ethical Consumption and New Business Models in the Food Industry. Evidence from the Eataly Case," Journal of Business Ethics, Springer, vol. 114(3), pages 473-488, May.
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    3. repec:lic:licosd:32312 is not listed on IDEAS
    4. Kong, Dongmin, 2012. "Does corporate social responsibility matter in the food industry? Evidence from a nature experiment in China," Food Policy, Elsevier, vol. 37(3), pages 323-334.
    5. Miguel Carriquiry & Bruce A. Babcock, 2007. "Reputations, Market Structure, and the Choice of Quality Assurance Systems in the Food Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(1), pages 12-23.
    6. Kym Anderson & Gordon Rausser & Johan Swinnen, 2013. "Political Economy of Public Policies: Insights from Distortions to Agricultural and Food Markets," Journal of Economic Literature, American Economic Association, vol. 51(2), pages 423-477, June.
    7. Gavrel, Frédéric & Lebon, Isabelle & Rebière, Thérèse, 2012. "Minimum wage, on-the-job search and employment: On the sectoral and aggregate equilibrium effect of the mandatory minimum wage," Economic Modelling, Elsevier, vol. 29(3), pages 691-699.
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    Cited by:

    1. Yong-Cong YANG & Pu-Yan NIE, 2016. "Asymmetric competition in food industry with product substitutability," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 62(7), pages 324-333.
    2. You-Hua CHEN & Pu-Yan NIE & Yong-Cong YANG, 2017. "Effects of corporate social responsibility on food safety," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(12), pages 539-547.

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