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A general equilibrium analysis of food industry considering the food quality

Author

Listed:
  • Pu-Yan NIE

    (Institute of Industrial Economics and Institute of Resources, Environment & Sustainable Development, Jinan University, Guangzhou, P.R. China)

  • You-Hua CHEN

    (College of Economics and Management and Guangdong Center for Rural Economic Studies, South China Agricultural University, Guangzhou, P.R. China)

Abstract

By establishing a dynamic equilibrium model, the paper analyses the equilibrium of the food industry and the equilibrium about the food quality as well as quantity is achieved. Firstly, the study examines the effects of competitions on the price, outputs, profits and social welfare. The authors argue that competition reduces the food quality. Secondly, this paper shows that consumers benefit from the quality regulation while producers undertake a loss. Moreover, social welfare first increases then decreases with the regulation. Thirdly, the optimal quality regulation is presented and a higher quality regulation reduces competition, while the lower quality regulation promotes it. Finally, the effects of fixed costs on the equilibrium number of firms in the corresponding industry are captured.

Suggested Citation

  • Pu-Yan NIE & You-Hua CHEN, 2014. "A general equilibrium analysis of food industry considering the food quality," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 60(7), pages 301-308.
    • Handle: RePEc:caa:jnlage:v:60:y:2014:i:7:id:115-2013-agricecon
    DOI: 10.17221/115/2013-AGRICECON
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    References listed on IDEAS

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    Cited by:

    1. Yong-Cong YANG & Pu-Yan NIE, 2016. "Asymmetric competition in food industry with product substitutability," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 62(7), pages 324-333.
    2. You-Hua CHEN & Pu-Yan NIE & Yong-Cong YANG, 2017. "Effects of corporate social responsibility on food safety," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(12), pages 539-547.

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