Effects of Higher Minimum Quality Standards on Food Safety: Evidence From Criminal Cases Found in China's Court Documents

Abstract

Food safety is a credence good that is hard for consumers to assess even after consumption. Government have used minimum quality standards (MQSs) to prevent producers from selling products below a predetermined quality threshold, thereby improving the overall quality in the market. This study is the first to empirically examine the impact of MQSs on food safety in China. We constructed the number of mutton criminal cases (per billion people) as a proxy for food safety in a province, based on the data obtained from China Judgments Online, we evaluated the effect for the period of 2013 through 2019. Using the generalized difference-in-difference econometric method, we found that a higher minimum quality standard led to an increase in mutton criminal cases related to the production and sale of counterfeit and shoddy products. Such results highlight a potential unintended consequence of a higher MQS and call for a higher penalty cost to mitigate the unintended consequence.