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Economics of Food and Safety: Risk, Information, and the Demand and Supply of Health

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  • Falconi, Cesar
  • Roe, Terry L.

Abstract

A model of expected utility maximization and a stochastic health production function are used to show how consumer's beliefs, the certainty of beliefs, and the presence of information affects demand for goods as they are driven by the demand for health. Then, it is shown that competitive markets fail to account for the health implications of substances in the production of a commodity that affects health, nor are incentives provided to inform consumers of substance concentrations and its implications to health. This result is shown to not necessarily follow in concentrated industries. Finally, conditions are derived whereby a benevolent government, in the absence of rent seeking, chooses optimal levels of information and taxes to attain Pareto optimal outcomes.

Suggested Citation

  • Falconi, Cesar & Roe, Terry L., 1990. "Economics of Food and Safety: Risk, Information, and the Demand and Supply of Health," Bulletins 7456, University of Minnesota, Economic Development Center.
    • Handle: RePEc:ags:umedbu:7456
    DOI: 10.22004/ag.econ.7456
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    References listed on IDEAS

    as
    1. Stiglitz, Joseph E, 1985. "Information and Economic Analysis: A Perspective," Economic Journal, Royal Economic Society, vol. 95(380a), pages 21-41, Supplemen.
    2. Pope, Rulon D., 1985. "The Impact Of Information On Consumer Preferences," Research on Effectiveness of Agricultural Commodity Promotion, April 9-10, 1985, Arlington, Virginia 279489, Regional Research Projects > NECC-63: Research Committee on Commodity Promotion.
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    1. Pantić, M. & Ristovski, Lj.M. & Mašković, Lj.D. & Tošić, B.S., 1996. "Free electron distribution in thin films," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 227(1), pages 43-54.
    2. Tošić, B.S. & Mašković, L.J.D. & Maksimović, R.M., 1994. "Spatial distribution of electron in doped films," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 211(4), pages 475-488.

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