Cost And Benefit Analysis On The Supply And Demand Of Food Safety

A famous saying in China is "Bread comes first" that means the prime function of food is to meet the fundamental need for human survival. However, with the modernization of food industry, food safety issue has become a critical problem with close related to the national development and people’s livelihood. And during the recent years, all kinds of food safety episodes have out broken constantly all over the world. In china, it has hurt the confidence of Chinese people on the current situation of food safety which has become one of the prominent social problems. So, it is an urgent issue concerned by the government, food producers and consumers to enhance the level of food safety and to resume the confidence of Chinese citizen which could only be solved through making their joint effort.According to the theory of supply and demand, it is the externality and imperfect and asymmetric food safety information that leads to market failure of food safety. So it is a good approach to find the way out for food safety issues through the cost and benefit analysis on the reason of the market failure and the discussion on the necessity of government interference on the settlement of food safety issue.The benefit of food safety refers to the reduction in the probability of illness and death risk caused by food safety which contains not only the less painful or lower death rate from food born illness of individuals, but also the reduction in the social medical cost and the productivity loss for the period of unable of working. And it also includes that the producers’ benefit from market. While, the cost of food safety refers to the cost to ensure and improve food safety, which contains not only the producers’ following cost, but also institutional cost of government. And it also includes the cosumers extra paying for food safety. Between the rationship of demand and supply of food safety, the quilibrium of cost and benefit determines the level of food safety. However, it is the inadequate supply of food safety that leads to food safety problems.According to the foundermental theories of food safety, it is the difference of market benefit for producers and the cost of the best supply of food safety that results in the inefficient supply of food safety, which means there exists external cost that is impossible to eliminate. From the point of view of practice, the efficient supply of food safety results from not only insatisfied market benefis of producers, but the weakness of willingness to pay for food safety cost by consumers, and together with the weak threatness from government constraint as well. So it is critical to balance cost and benefit of each party.In terms of the game analysis, questionare investigation and quantitative study, the main conclusions of the thesis can be list as following:fist, the author thinks that both mandatory and voluntary supplies of food satey are inadequate in China, and how to solve the food safety issue in China needs the joint effort made by government, food producers and consumers, especially through the madatary supply by the government, voluntary supply by producers and willingness to pay for food safety by consumers. Second, it needs to put more attention to the voluntary motivation of producers for food sarety supply under the market mechanism which might not noly enrich the food safety standad, but also save regulation cost and avoid efficiency loss. Third, the weak willingness to pay for food safty by China’s consumers also restricts the food safety supply. To cultivate good cosuming habit of food safety and enhance their willingness to pay are good to motivate the voluntary supply of food safety, and realize the reasonable allocation of food safety benefits as well. Fourth, it is only through the mandatory supply threat and strict punishment and perfect publication on the food safety information that might reduce the possibility of food safety episodes occurence and resume the confidence of Chinese citizens on food safety.Distinguished from the technical routes of other research, this thesis has been based on the special angle of demand and supply of food safety, combinng with the goverment regulations, motivations of producers and consumers’willingness, to explore the way to balance the cost and benefit of food safety. The value of this research lies:first of all, it enriches the cost and benefit analysis on food safety of developing countries, especially on China’s issues, which is of significance in the study of theory and practice of food safety. Second, it demonstrates that it is the inadquate mandatory and voluntary motivtiaon of supply together with the weakness in willingness to pay by consumers that leads to the inefficient supply of food safety in China, and the conclusion and recommendation of which is of significance in policy designing.