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Welfare Effects of Mandatory Traceability When Firms are Heterogeneous

  • Pouliot, Sebastien

We develop a framework in which the cost of producing a quantity food and the cost of food safety differs across firms. We show that large firms may supply the safest food even though small firms have a cost advantage in producing safe food. The model shows that mandatory traceability can decrease the overall safety of food when small firms that supply the safest food exit the industry. Our model applies to food safety but can be applied to a wide range of issues related to regulation and product quality.

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File URL: http://purl.umn.edu/61017
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Paper provided by Agricultural and Applied Economics Association in its series 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado with number 61017.

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Date of creation: Apr 2010
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Handle: RePEc:ags:aaea10:61017
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  1. Jason A. Winfree & Jill J. McCluskey, 2005. "Collective Reputation and Quality," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 206-213.
  2. Hobbs, Jill E., 2004. "Traceability in the Canadian Red Meat Sector," Economic and Market Information 55304, Agriculture and Agri-Food Canada.
  3. Dickinson, David L. & Bailey, DeeVon, 2002. "Meat Traceability: Are U. S. Consumers Willing To Pay For It?," 2002 Annual meeting, July 28-31, Long Beach, CA 19670, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Berry, Steven & Waldfogel, Joel, 2005. "Product Quality and Market Size," Working Papers 1, Yale University, Department of Economics.
  5. S├ębastien Pouliot & Daniel A. Sumner, 2008. "Traceability, Liability, and Incentives for Food Safety and Quality," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(1), pages 15-27.
  6. Crespi John M. & Marette Stephan, 2009. "Quality, Sunk Costs and Competition," Review of Marketing Science, De Gruyter, vol. 7(1), pages 1-36, August.
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