We describe market incentives for the provision of safe, nutritious foods in developing countries at each stage of the value chain. We also identify the limitations of a market-led approach, and highlight the need for the public sector to play a proactive role in the promotion of these foods through demand generation, infrastructure, capacity-building investments, and pro-poor regulation.

Foodborne diseases exact a large health toll in low and middle-income countries. We review the empirical research on the safety of food produced and consumed in these settings. We follow the value chain, from consumer demand to agricultural production, to describe existing knowledge and identify gaps for future research. We identify factors that contribute to food safety problems in low and middle-income countries. These factors include: limited consumer awareness and ability to pay for food safety; the lack of incentives to invest in food safety along the food supply chain, from farmers to aggregators, processors, food service providers, and retailers; and weakness of the public institutions responsible for regulatory enforcement. Programs that engage midsize and larger firms in co-regulation and reward farmers and firms for investment in food safety suggest potential ways forward. (C) 2019 Elsevier Ltd. All rights reserved.

This paper studies the case in which a firm delegates quality control to an independent monitor. In a repeated game, consumers’ trust provides incentives to acquire information about whether the good is defective, and withhold defective goods from sale. If third-party reports are observable to consumers, delegation lessens the first and dispenses with the second moral hazard concern but also creates agency costs. Internal quality control is optimal only if trades are sufficiently frequent and consumer information is sufficiently precise. This result holds in the presence of the possibility of collusion, fully non-verifiable presale information, and economies of scale in external quality control.

We study a model of detection and control of an infectious disease by local health agencies in the presence of imperfect information about the likelihood of an outbreak and limited diagnostic capacity that is insufficient to determine the prevalence of disease in all localities in a timely manner. When shared diagnostic capacity is rationed based on reports of symptoms, the decision to report symptoms or not creates a trade-off. On the one hand, rigorous testing of one’s locality allows the health agency in that locality to make an informed disease control decision. On the other hand, reducing the availability of diagnostic capacity for the other localities increases the probability that the disease will spread from an untested area where the disease is not controlled in the absence of more evidence of an outbreak. Symptoms are over-reported (respectively, reported truthfully, or under-reported) when the cost of disease control is sufficiently small (respectively, in some intermediate range, or sufficiently large). The rates of reporting suspicions decrease as the cost of disease control increases because the localities remain exposed more often and the health agencies prefer to reduce the risk of disease transmission by letting other agencies become informed. If the disease incidence decreases or infectiousness increases, symptoms are reported less frequently. If the precision of private signals increases, the extent of over-reporting of symptoms may increase. For different values of the parameters it can be socially optimal to subsidize or tax requests for additional investigations and confirmatory testing.

This paper studies the decision of a firm that sells an experience good to delegate quality control to an independent monitor. In an infinitely repeated game consumers’ trust provides incentives to (1) acquire information about whether the good is defective and (2) withhold the good from sale if it is defective. If third-party reports are observable to consumers, delegation of monitoring lessens the first and dispenses with the second moral hazard concern but also creates agency costs due to either limited liability or lack of commitment. In equilibrium the firm controls quality without an independent monitor only if trades are sufficiently frequent and consumer information about quality is sufficiently precise. This result holds under different assumptions about feasible contracts, collusion, verifiability of reports, joint inspections, and the number of firms that hire the third-party monitor. If third-party reports are not publicly observed, delegation can be optimal only if two or more firms hire the third-party monitor because then both moral hazard concerns are present under delegation.

iv

The paper studies the questions of why and when a supply chain should invest in a traceability system that allows the identification of which supplier is responsible for quality defects due to insufficient non-contractible effort. We consider an environment with complementarity in upstream and downstream efforts to provide quality, imperfect, lagged signals of intermediate and final quality, and repeated interaction. It is demonstrated that in deciding whether to maintain information about product origin, firms face a trade-off. On one hand, the downstream firm is tempted to condone limited upstream shirking when products are not traceable to their firm of origin. On the other hand, the downstream firm is tempted to vertically coordinate shirking in the provision of quality when products are traceable. Perfect traceability is not optimal if (1) the ratio of the cost savings from upstream and downstream shirking is neither too high nor too low or (2) the downstream firm sufficiently infrequently detects input defects or (3) the consumer experience is a sufficiently noisy signal of quality.

This paper studies the decision of a firm that sells an experience good to delegate quality control to an independent monitor. In an infinitely repeated game consumers’ trust provides incentives to (1) acquire information about whether the good is defective and (2) withhold the good from sale if it is defective. If third-party reports are observable to consumers, delegation of monitoring lessens the first and dispenses with the second moral hazard concern but also creates agency costs due to either limited liability or lack of commitment. In equilibrium the firm controls quality without an independent monitor only if trades are sufficiently frequent and consumer information about quality is sufficiently precise. This result holds under different assumptions about feasible contracts, collusion, verifiability of reports, joint inspections, and the number of firms that hire the third-party monitor. If third-party reports are not publicly observed, delegation can be optimal only if two or more firms hire the third-party monitor because then both moral hazard concerns are present under delegation.

This paper studies how to best inform a consumer about her valuations for multiple goods when the consumer can learn about fewer goods than she can consume. The consumer should learn about the worst and/or best consumption choices. If the number of different goods that the consumer can consume increases, the consumer should learn about a greater number of goods to avoid and fewer goods to select.

This paper shows that buying from a team of sellers can be optimal for the buyer in a static model where the buyer has private information about quality, sellers have private information about the cost and choice of effort, and quality is not contractible.

Abstract This article studies the divergence in the planning and equilibrium solutions for a multicell aquifer with heterogeneity in cell depths. A spatial model is developed that accounts for the lateral movement of water between cells. The optimal steady state of this problem is compared with the competitive equilibrium steady state. Studying the steady state conditions in the two outcomes allows the nature of the spatial externalities to be characterized and reveals the effects of varying cell depths. In a two-cell specification of the model, closed-form expressions are derived for the difference in optimal steady state water table elevations between the two cells. The two-cell model is then applied numerically to quantify the spatial externalities and asymmetry effects in Sheridan County, Kansas, which overlies the Ogallala aquifer. Simulated welfare losses in this model are relatively large and are sensitive to the asymmetry in cell depths.