Incentive systems for food quality control with repeated deliveries: Salmonella control in pork production |
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Authors: | King, Robert P. Backus, Ge B. C. van der Gaag, Monique A. |
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Affiliation: | 1 Department of Applied Economics, University of Minnesota, USA 2 Agricultural Economics Research Institute, The Netherlands 3 Farm Management Group and Animal Sciences Group, Wageningen University, The Netherlands |
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Abstract: | This paper presents a dynamic principal-agent analysis of incentivesystems for Salmonella control. The European Union will requireSalmonella testing from 2008. On the basis of the producer'sperformance history in controlling Salmonella, the incentivesystems analysed determine quality premiums to the producer,testing frequencies for hogs delivered, as well as charges tothe producer for testing and penalties. Using cost estimatesand technical parameters, we evaluate two dynamic incentivesystems. We also assess the impact of ownership structure onperformance. The more efficient incentive system economiseson testing costs by reducing the probability of testing in responseto a favourable production history and is preferred under allownership structures. |
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Keywords: | dynamic programming food quality principal-agent |
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