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How Should Food Safety Certification be Financed?
Author(s) -
Crespi John M.,
Marette Stphan
Publication year - 2001
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/0002-9092.00214
Subject(s) - certification , business , agency (philosophy) , product certification , product (mathematics) , competition (biology) , monopoly , quality (philosophy) , unit (ring theory) , food safety , industrial organization , microeconomics , economics , biology , ecology , philosophy , geometry , mathematics , management , mathematics education , epistemology , medicine , pathology
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.