How Should Food Safety Certification be Financed?

John M. Crespi and Stéphan Marette ()

American Journal of Agricultural Economics, 2001, vol. 83, issue 4, pages 852-861

Abstract: An analytical framework where consumers are imperfectly informed about the safety of products is used to investigate the welfare effects of a public certification system. Several certification fees under alternative structures of certification cost are analyzed. By maintaining competition among numerous sellers, voluntary certification financed by a per-unit fee is efficient (and sufficient) to signal product safety. However, mandatory certification linked with a fixed user fee may be necessary if a seller wields monopoly power. Further, certification by a single, private agency results in a distorted fee. Copyright 2001, Oxford University Press.

Date: 2001
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