Selection of Food Safety Standards

This paper examines performance versus process standards modeling the variability of industry-level compliance and therefore food safety. Monte Carlo simulations are conducted manipulating four factors: the variances of input use of efficient and inefficient firms, the proportion of inefficient firms in the industry and the policymakers' level of risk aversion. Results suggest that process standards may be preferred over performance standards when inefficient firms prevail in the industry, when input use is highly variable and when the policymaker pays less attention to the variability of industry-level compliance.