Environment and Food Safety in Agriculture: Are Labels Efficient?

Abstract

In this article, we try to elicit whether an information on food safety is consistent with a more environmental‐friendly agriculture. As the policy makers generally intervene to limit negative externalities in agriculture on the supply side, is a labelling policy an efficient way to reduce pollution levels in this sector? The intuitive reason of a food safety label rests on the fact that consumers seem to be more concerned with information on food safety aspects than on environmental ones. In a vertical differentiation model, we analyse the impacts of labels mentioning food safety and environmental aspects, on firms' profits, consumers' surplus and pollution levels. Given our main assumption that food safety and environmental consequences are directly linked, our principal results show that a labelling policy on food safety can be efficient from an environmental point of view, depending on the initial healthy products proportion in the market. Another result is based on the fact that a label policy can reduce consumer's surplus.