Selection of Food Safety Standards
Food safety regulations are evolving to more performance-based regimes in which firrms have greater flexibility and responsibility for adopting effective controls. Within this context, this paper compares performance and process standards modeling the variability of industry-level compliance and therefore the resultant level of food safety. Monte Carlo simulations are conducted manipulating five factors: the variances of input use of efficient and inefficient firms, the proportion of inefficient firms in the industry, the mean of the error term for inefficient firms, and the policymakers' level of risk aversion. Results suggest that process standards may be preferred over performance standards when inefficient firms prevail in the industry, when input use is highly variable and when the regulator pays less attention to the variability of industry-level compliance and more to the level of the standard.
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- Marino, Anthony M, 1998. "Regulation of Performance Standards versus Equipment Specification with Asymmetric Information," Journal of Regulatory Economics, Springer, vol. 14(1), pages 5-18, July.
- Besanko, David, 1987. "Performance versus design standards in the regulation of pollution," Journal of Public Economics, Elsevier, vol. 34(1), pages 19-44, October.
- John M. Antle, 1996. "Efficient Food Safety Regulation in the Food Manufacturing Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1242-1247.
- Hueth, Brent & Melkonyan, Tigran A., 2003. "Performance, Process, and Design Standards in Environmental Regulation," 2003 Annual meeting, July 27-30, Montreal, Canada 22148, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Lichtenberg, Erik & Zilberman, David, 1988. "Efficient Regulation of Environmental Health Risks," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 167-78, February.
- William J. Baumol, 1963. "An Expected Gain-Confidence Limit Criterion for Portfolio Selection," Management Science, INFORMS, vol. 10(1), pages 174-182, October.
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