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The Economics of Voluntary Traceability in Multi‐Ingredient Food Chains
Author(s) -
SouzaMonteiro Diogo M.,
Caswell Julie A.
Publication year - 2010
Publication title -
agribusiness
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.57
H-Index - 43
eISSN - 1520-6297
pISSN - 0742-4477
DOI - 10.1002/agr.20233
Subject(s) - traceability , ingredient , business , turnover , food chain , economics , industrial organization , food science , mathematics , management , statistics , chemistry , biology , paleontology
The consumption of multi‐ingredient foods is increasing across the globe. Traceability can be used as a tool to gather information about and manage food safety risks associated with these types of products. The authors investigate the choice of voluntary traceability in three‐tiered multi‐ingredient food supply chains. They propose a framework based on vertical control and agency theory to model three dimensions of traceability systems: depth, breadth, and precision. Their analysis has three main results. First, full traceability is feasible as long as there are net benefits to a downstream firm that demands traceability across all ingredients. Second, horizontal network externalities are positive because an increase in the level of traceability in one ingredient requires a similar increase in others. Finally, vertical network effects will be positive insofar as willingness to pay and probabilities of food safety hazards increase. [EconLit Classification: Q130, L140]. © 2010 Wiley Periodicals, Inc.