Economic approaches to measuring the significance of food safety in international trade

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.