Premium
Optimal Sharing of Foodborne Illness Prevention between Consumers and Industry: The Effect of Regulation and Liability
Author(s) -
Roe Brian
Publication year - 2004
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/j.0092-5853.2004.00584.x
Subject(s) - tort , liability , business , affect (linguistics) , public economics , food safety , risk analysis (engineering) , actuarial science , economics , psychology , medicine , finance , communication , pathology
Consumers and the food industry can both prevent foodborne illness. Two questions are explored: what is the socially optimal level of preventative effort by each and can tort and regulatory instruments induce such behavior? Analysis is complicated by two aspects of food safety technology: one party's effort can affect the marginal effectiveness of the other party's effort and damage functions can be nonconvex. Previous analysis of accidents under torts and regulation fails to consider these generalizations. Indeed, results concerning the ability of tort and regulatory instruments to induce first‐best and second‐best behavior often contradict previous results in the literature.