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Ensuring a Safe Food Supply: The Importance of Heterogeneity

Author

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  • Graff Zivin Joshua S

    (Columbia University)

Abstract
In this paper we develop a model of food safety regulation that considers the employment of a differentiated food market with two types of government certified quality standards: a minimum standard and a higher one. Individuals, heterogeneous in their susceptibility to food-related health risks, choose which safety-grade of food to consume based on price and their vulnerability. The model is then extended to the case where consumers misperceive their susceptibility to health risks associated with food consumption. The theoretical presentation is followed by an application of the model to examine campylobacteriosis and salmonellosis caused by consumption of beef, pork, and chicken. The paper demonstrates that the benefits from multiple quality standards hinges fundamentally on the distribution of vulnerabilities across the population and the associated distribution of population health risks for a given level of food quality. Uniform standards are generally preferred to differentiated ones under either stringent or lax regulations on population health risk. If the population distribution of vulnerabilities is unimodal and consumers misperceive their vulnerability, the value of a differentiated policy will depend on which quality standard is attracting the majority of consumers. The empirical results confirm the importance of the population distribution of vulnerability on the relative desirability of single versus multiple quality standards.

Suggested Citation

  • Graff Zivin Joshua S, 2006. "Ensuring a Safe Food Supply: The Importance of Heterogeneity," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 4(1), pages 1-27, January.
  • Handle: RePEc:bpj:bjafio:v:4:y:2006:i:1:n:2
    DOI: 10.2202/1542-0485.1119
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    References listed on IDEAS

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    1. Knutson, Ronald D. & Cross, H. Russell & Acuff, Gary R. & Russell, Leon H. & Boadu, Fred O. & Nichols, John P. & Wang, Suojin & Ringer, Larry J. & Childers Jr, Asa B. & Savell, Jeff W., 1995. "Reforming Meat and Poultry Inspection: Impacts of Policy Options," Working Papers 258074, Texas A&M University, Agricultural and Food Policy Center.
    2. Zivin, Joshua Graff & Zilberman, David, 2002. "Optimal Environmental Health Regulations with Heterogeneous Populations: Treatment versus "Tagging"," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 455-476, May.
    3. Richard C. Ready & Jean C. Buzby & Dayuan Hu, 1996. "Differences between Continuous and Discrete Contingent Value Estimates," Land Economics, University of Wisconsin Press, vol. 72(3), pages 397-411.
    4. Young Sook Eom, 1994. "Pesticide Residue Risk and Food Safety Valuation: A Random Utility Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 760-771.
    5. John M. Antle, 2000. "No Such Thing as a Free Safe Lunch: The Cost of Food Safety Regulation in the Meat Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 310-322.
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