Mandatory vs. Voluntary Approaches to Food Safety
to production practices that provide greater food safety. For example, the
government could establish a program under which farmers are paid for
acreage on which integrated pest management or organic farming
techniques are used. Such a program could have the dual goal of reducing
water pollution and reducing pesticide residues on food.
Of course, the need for government intervention, either through direct
negotiation with individual firms/industries or through the establishment of
general voluntary programs, depends on the incentives that firms face to
undertake protective measures voluntarily in the absence of any
intervention. In the following section, we present a simple framework for
examining a firm's incentives to undertake voluntary food safety measures.
This framework highlights the factors that can be significant in
determining those incentives and hence in determining the likely
effectiveness of reliance on voluntary measures.
III. A Framework For Voluntary Adoption
Figure 1 depicts the basic choice facing a firm13 that has two alternative
courses of action: (1) to undertake measures to ensure increased food safety
voluntarily, or (2) not to take any initiative unless forced (or induced) to do
so by government regulations or other forms of mandatory public
policies.14 This choice could be in the context of the first type of voluntary
approach discussed above, where the firm takes the initiative to undertake
voluntary measures without any explicit government program in place.
Alternatively, it could be in the context of the third type of approach, where
the firm makes a decision about whether or not to participate in a voluntary
program that has been established by the government.15 We do not
consider explicitly the second type of agreement, under which the firm and
the regulator negotiate or bargain one-on-one over a level of voluntary
16
compliance.
13 We present the framework in the context of an individual firm. In some cases,
a group of firms or an industry may be faced with this choice. See Segerson
(1997a) for a related model with multiple firms.
14 This basic structure has been used in models of voluntary approaches to
environmental protection. See Segerson and Miceli (1997), Segerson (1997a), and
Segerson (1997b).
15 We do not consider explicitly the government's decision about whether or not
to establish such a program. That decision would clearly depend on the firm's
anticipated reaction to the program, which is depicted in Figure 1. For a model that
presents the regulator's choice explicitly in the context of environmental protection,
see and Segerson and Miceli (1997) and Segerson (1997a).
16 Segerson and Miceli (1997) present a model of this type of agreement in the
context of environmental protection. They have shown that under some conditions
agreements resulting from this type of negotiation may lead to low levels of
protection. However, since environmental damages are imposed on third parties
(rather than on the consumer of the product whose production created the