Food safety and government regulation in rural China

Abstract

Due to the negative impact of China's food scandal and people's awareness of food safety, consumers and the government are constantly looking for healthier and safer food. This paper finds that rural agricultural products (RAP) have an absolute competitive advantage in public consumption choice. However, after an in-depth investigation, there are many potential safety risks in the RAP. Serious information asymmetry exists in the consumption choices and production processes of RAP. Furthermore, there are many regulatory gaps in RAP. Consequently, it is necessary to strengthen government regulation to correct market failure and current ineffective regulation. Game theory analysis shows that increasing incentives and penalties for large family farms may be an effective regulatory policy. The findings of this paper are beneficial to the formulation of reasonable government regulation policies to ensure the safety of RAP. • The rural agricultural products have absolute competitive advantage in public consumption choice in China. • Serious information asymmetry exists in the consumption choices and production processes of rural agricultural products. • It is necessary to strengthen government regulation to correct market failure and current ineffective regulation. • Game theory analysis shows that increasing incentives and penalties for large family farms may be an effective regulatory policy.