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Public Goods, Hysteresis, and Underinvestment in Food Safety

Author

Listed:
  • Richards, Timothy J.
  • Nganje, William E.
  • Acharya, Ram N.

Abstract

Despite the economic damage inflicted by a foodborne disease outbreak, firms at all points in the supply chain appear to be reluctant to invest in the necessary food safety technologies and practices. We argue that these investments are subject to both hysteretic and public good effects, and construct a theoretical model of food safety investment, calibrated to describe the 2006 E. coli outbreak in California spinach. Both effects are found to induce delays in food safety investments, but the public good effect dominates. We suggest a number of policy options that improve incentives to contribute to the public good.

Suggested Citation

  • Richards, Timothy J. & Nganje, William E. & Acharya, Ram N., 2009. "Public Goods, Hysteresis, and Underinvestment in Food Safety," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(3), pages 1-19, December.
    • Handle: RePEc:ags:jlaare:57627
    DOI: 10.22004/ag.econ.57627
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    Cited by:

    1. Tubetov, Dulat & Musshoff, Oliver & Kellner, Ulla, 2012. "Investments in Kazakhstani Dairy Farming: A Comparison of Classical Investment Theory and the Real Options Approach," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 51(3), pages 1-28, August.
    2. Sangcheol Song, 2014. "Entry mode irreversibility, host market uncertainty, and foreign subsidiary exits," Asia Pacific Journal of Management, Springer, vol. 31(2), pages 455-471, June.
    3. Hongfeng Zhang & Chengyun Sun & Lu Huang & Hongyun Si, 2021. "Does Government Intervention Ensure Food Safety? Evidence from China," IJERPH, MDPI, vol. 18(7), pages 1-22, March.
    4. Tubetov, Dulat & Maart, Syster Christin & Musshoff, Oliver, 2012. "Experimental examination of land investment decisions with volatile returns A comparison between Kazakhstani and German farmers," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122454, European Association of Agricultural Economists.
    5. Tubetov, Dulat & Maart, Syster Christin & Musshoff, Oliver, 2012. "Comparison of the investment behavior of Kazakhstani and German farmers: An experimental approach," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124650, Agricultural and Applied Economics Association.
    6. Jin, Cangyu & Bouzembrak, Yamine & Zhou, Jiehong & Liang, Qiao & Marvin, Hans, 2021. "Drivers of Food Safety Risks in Aquatic Products in China: A Bayesian Network approach," 2021 Annual Meeting, August 1-3, Austin, Texas 313965, Agricultural and Applied Economics Association.
    7. Bitsch, Vera & Koković, Nevena & Rombach, Meike, 2014. "Risk Communication and Market Effects during Foodborne Illnesses: A Comparative Case Study of Bacterial Outbreaks in the U.S. and in Germany," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 17(3), pages 1-18, September.
    8. Tubetov, Dulat & Maart, Syster Christin & Musshoff, Oliver, 2012. "Comparison of the Investment Behavior of German and Kazakhstani Farmers: an Experimental Approach," GlobalFood Discussion Papers 122422, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.

    More about this item

    Keywords

    Food Security and Poverty;

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