International trade in food products has expanded rapidly in recent years.
This paper presents economic approaches for analyzing the effects on trade
in food products of the food safety requirements of governments and private
buyers. Important economic incentives for companies to provide improved fo
od safety arise from (1) public incentives such as ex ante requirements for
sale of a product with sufficient quality and ex post penalties (liability
) for sale of products with deficient quality, and (2) private incentives f
or producing quality such as internal performance goals (self-regulation) a
nd the external (certification) requirements of buyers. The World Trade Org
anization's Sanitary Phytosanitary Agreement facilitates scrutiny of the be
nefits and costs of country-level regulatory programs and encourages regula
tory rapprochement on food safety issues. Economists can help guide risk ma
nagement decisions by providing estimates of the benefits and costs of prog
rams to improve food safety and by analyzing their effect on trade in food
products. (C) 2000 Elsevier Science B.V. All rights reserved.