Comparing food safety standards

Food safety regulations are evolving to performance-based regimes in which firms have greater flexibility and responsibility in adopting effective controls. Within such a context, this paper compares performance and process standards modeling the variability of industry-level compliance and therefore the resultant level of food safety. Monte Carlo simulations are conducted manipulating five factors: the variances of input use of efficient and inefficient firms, the proportion of inefficient firms in the industry, the mean of the error term for inefficient firms, and the policymakers’ risk preferences. Results suggest that process standards may be preferred over performance standards under certain circumstances.