Controlling Avoidance of Food Safety Regulations in Meat Packing Industry

Abstract

The sale of meat and poultry contains asymmetric information dealing with food safety. Since pathogens in most cases are invisible, consumers lack information on the safety of meat and poultry. Government interaction through the Food Safety and Inspection Service (FSIS) in the meat and poultry industry is necessary to regulate the safety of meat and poultry products. Inevitably, any rules in society are likely to include violators. The cost of perfectly safe food is far too great for the industry to bear. The marginal gain in revenue from violating a regulation may be greater than the marginal cost. Violators of rules may resort to sophisticated means to avoid detection of the original violations. The means used to avoid detection may be legal or illegal. Effective regulation of avoidance activities will lead to lower violations of the original crime. Such regulations may be ex-ante or ex-post. This paper discusses potential effectiveness of ex-ante or ex-post regulations on avoidance activities of food safety regulations in the meat and poultry industry. The use of ex-ante measures such as contracting external service providers coupled with the threat of ex-post punishment on service providers would potentially decrease the number of avoidance activities and their associated original crime in the meat and poultry industry.