Waiting for the Invisible Hand: Novel Products and the Role of Information in the Modern Market for Food

Trenton Smith (), Hayley Chouinard () and Philip Wandschneider ()

No 2009-07, Working Papers from School of Economic Sciences, Washington State University

Abstract: This paper places the modern spread of diet-related chronic disease in the United States within the context of more than a century of innovation in food processing technology, discovery in nutrition science, and corrective policy measures aimed at improving public health. We ask whether the current state of a airs represents a market failure, and if so what might be done about it. We argue that while today’s industrial food system has its advantages, the asymmetric information problems inherent to this system have resulted in a lemons-style break down in the market for processed foods. The appropriate policy response to such situations (namely, verifiable quality standards) is well known, but such policies are likely (in the short run) to reduce profit for existing large industrial producers of food. In light of the food industry’s long history of success at regulatory capture, we propose the formation of a new independent food standards agency devoted to protecting the interests of the American consumer.

Keywords: credence goods; history; food policy; certification (search for similar items in EconPapers)
JEL-codes: D23 D83 I18 Q18 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2009-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Waiting for the invisible hand: Novel products and the role of information in the modern market for food (2011)
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