The implementation mechanisms of voluntary food safety systems

Abstract

The recent food scares have been the motivation for voluntary programmes on food safety being promoted by public authorities and voluntarily implemented by food operators. In this article, we take into account the nature of the contamination risk to investigate the complementarities between private and public mechanisms for those voluntary systems to be implemented by a firm. We show two main results. First, when the firm directly markets its products to consumers a strong mandatory threat is a sufficient condition to implement voluntary systems whatever the risk of contamination. In contrast, when the mandatory threat is weak voluntary systems should be more implemented in industries where the risk of food contamination is low (pesticide residue) than in industries where the risk of contamination is high (pathogenic contamination). Second, when the risk of food contamination is low and the firm is embedded in a supply chain where the retailer can impose its own safety system, a well-designed penalty contract will induce a voluntary implementation whatever the mandatory threat.