Moral Hazard, Inspection Policy, and Food Safety |
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| Authors: | S Andrew Starbird |
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| Institution: | S. Andrew Starbird is associate professor of operations and management information systems and Breetwor Fellow in the Leavey School of Business at Santa Clara University. He is also affiliated with the Food &Agribusiness Institute at SCU. The author thanks the anonymous referees and Ian Sheldon for their useful comments. |
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| Abstract: | Buyers have imperfect information about the food safety efforts exerted by suppliers. To gather information about safety, buyers often employ sampling inspection. Sampling inspection exhibits sampling error so some unsafe product passes inspection and some safe product does not. This uncertainty influences buyer and supplier behavior. In this article, I use a principal–agent model to examine how sampling inspection policies influence food safety. I use the model to examine the sampling inspection policies in the 1996 Pathogen Reduction/Hazard Analysis Critical Control Point Act. I conclude that the regulation of sampling inspection procedures is an effective tool for policy makers who wish to improve food safety. |
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| Keywords: | food safety imperfect information moral hazard sampling inspection supply chain |
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