Incentive payments, food safety and moral hazard in the supply chain

Robert Fraser and Mohamud Hussein

No 170525, 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France from Agricultural Economics Society

Abstract: This paper analyses an incentive payment-based approach to improving food safety in the supply chain. It develops a principal-agent model of the food supply chain in which the principal offers heterogeneous agents a payment to implement costly additional practices to improve food safety. It is shown that the presence or absence of the moral hazard problem affects the balance of benefits and costs from broadening the scope of the system from just lower cost larger agents to include higher cost smaller agents, thereby affecting the optimal design of the system. In particular, broadening the scope of the system to include smaller agents by increasing the size of the incentive payment can ameliorate the moral hazard problem among larger agents to the extent that this more costly approach is socially optimal.

Keywords: Demand and Price Analysis; Food Consumption/Nutrition/Food Safety (search for similar items in EconPapers)
Pages: 17
Date: 2014-04
New Economics Papers: this item is included in nep-agr, nep-cta and nep-hrm
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/170525/files/R ... r-Fraser-Hussein.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aesc14:170525

DOI: 10.22004/ag.econ.170525

Access Statistics for this paper

More papers in 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France from Agricultural Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search (aesearch@umn.edu).