Mandatory Food Recalls
Food recalls are important for two reasons. One is that they mitigate harm when product failures occur. Another is that they augment incentives to invest in safety. When recalls are justified for their mitigation value, it makes sense that regulatory bodies be granted more control of the recall process in order to improve the manner in which recalls are conducted. Such is the stated intent of most proposals for changing the food recall system. However, we show that recalls can be justified by their incentive effect alone. In fact, recalls can be beneficial even when the social value of the harm they mitigate is so small as to be less than the costs of carrying them out. In these cases, it is important that proposals designed to improve the recall process avoid unintended side effects. First, proposals should avoid redirecting regulatory resources towards recall oversight and away from other, more pressing, food safety priorities. Second, it is important to avoid creating an environment in which agencies face a greater need to justify their recall requests. When the mitigation value of recalls is small, this may inadvertently prevent the initiation of recalls that could otherwise play a positive role in aligning incentives for safety.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gregg A. Jarrell & Sam Peltzman, 1984.
"The Impact of Product Recalls on the Wealth of Sellers,"
University of Chicago - George G. Stigler Center for Study of Economy and State
33, Chicago - Center for Study of Economy and State.
- Jarrell, Gregg & Peltzman, Sam, 1985. "The Impact of Product Recalls on the Wealth of Sellers," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 512-36, June.
- Schmitz, Patrick W., 2000.
"On the joint use of liability and safety regulation,"
International Review of Law and Economics,
Elsevier, vol. 20(3), pages 371-382, September.
- Schmitz, Patrick W., 2000. "On the Joint Use of Liability and Safety Regulation," MPRA Paper 12536, University Library of Munich, Germany.
- Michael R. Thomsen & Rimma Shiptsova & Sandra J. Hamm, 2006. "Sales Responses to Recalls for Listeria monocytogenes: Evidence from Branded Ready-to-Eat Meats," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(4), pages 482-493.
- Hooker, Neal H. & Teratanavat, Ratapol P. & Salin, Victoria, 2005. "Crisis management effectiveness indicators for US meat and poultry recalls," Food Policy, Elsevier, vol. 30(1), pages 63-80, February.
- Lusk, Jayson L. & Schroeder, Ted C., 2000.
"Effects Of Meat Recalls On Futures Market Prices,"
2000 Conference, April 17-18 2000, Chicago, Illinois
18925, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
- Marino, Anthony M, 1997. "A Model of Product Recalls with Asymmetric Information," Journal of Regulatory Economics, Springer, vol. 12(3), pages 245-65, November.
- Michael R. Thomsen & Andrew M. McKenzie, 2001. "Market Incentives for Safe Foods: An Examination of Shareholder Losses from Meat and Poultry Recalls," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 526-538.
- Frenzen, Paul D. & Buzby, Jean C. & Rasco, Barbara, 2001. "Product Liability And Microbial Foodborne Illness," Agricultural Economics Reports 34059, United States Department of Agriculture, Economic Research Service.
- Dranove, David & Olsen, Chris, 1994. "The Economic Side Effects of Dangerous Drug Announcements," Journal of Law and Economics, University of Chicago Press, vol. 37(2), pages 323-48, October.
When requesting a correction, please mention this item's handle: RePEc:ags:aaea08:6083. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.