How Should Food Safety Certification Be Financed? |
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Authors: | John M Crespi & Stéphan Marette |
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Institution: | Department of Agricultural Economics, Kansas State University,;UMR d'Economie Publique INRA-INAPG, Paris, France |
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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. |
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Keywords: | asymmetric information food safety labeling regulation user fees |
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