A general equilibrium analysis of food industry considering the food quality

Pu-yan Nie and You-Hua Chen
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You-Hua Chen: College of Economics and Management and Guangdong Center for Rural Economic Studies, South China Agricultural University, Guangzhou, P.R. China

Agricultural Economics, 2014, vol. 60, issue 7, 301-308

Abstract: By establishing a dynamic equilibrium model, the paper analyses the equilibrium of the food industry and the equilibrium about the food quality as well as quantity is achieved. Firstly, the study examines the effects of competitions on the price, outputs, profits and social welfare. The authors argue that competition reduces the food quality. Secondly, this paper shows that consumers benefit from the quality regulation while producers undertake a loss. Moreover, social welfare first increases then decreases with the regulation. Thirdly, the optimal quality regulation is presented and a higher quality regulation reduces competition, while the lower quality regulation promotes it. Finally, the effects of fixed costs on the equilibrium number of firms in the corresponding industry are captured.

Keywords: equilibrium number; fixed costs; game theory; quality regulation (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:caa:jnlage:v:60:y:2014:i:7:id:115-2013-agricecon

DOI: 10.17221/115/2013-AGRICECON

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