On the Emergence of Private Standards: An Industrial Organization Approach

Abstract

This contribution aims at providing a focused discussion on the main economic issues associated with the emergence of private standards in agrifood chains. Public and private modes for food safety management are explored. Based on a critical review of the recent developments of Industrial Organization (IO) approaches, this contribution examines the rationale behind the emergence of private strategies for food safety governance, their effects on the food supply chain organization, and the strategic interactions between public regulator and private actors in the provision of food safety in agrifood markets. The analysis then draws the attention on the interactions between public regulatory instances (notably between the legislation and the official control system) and on their influence on the incentive for firms to develop voluntary standards. By focusing on buyer-supplier relations in international food supply chains, and based on recent theoretical developments in the IO literature, a simple formalization is finally proposed to investigate the role of public “output standards” and control imperfections in shaping buyer incentive to impose “process standards” over suppliers for import safety management purposes.