Effect Of Food Safety Incidents On Import Trade And Social Welfare

Recently food safety incidents occur very frequently in China,which causes great harm to both customers'physical and mental health and industries' reputation.As a result,the authority of the food safety supervision system has faced serious challenges.In order to cope with such incidents,the government should build the emergency administration system of food safety incidents to work on emergency basis,mainly focused on the emergency response system and mechanism as well as the legal system.Meanwhile the academician concerned and identified the impact of the food safety incidents on the purchasing behavior and confidents of the customers,business activities,food safety supervision departments as well as the importing and exporting of agricultural products.However,the outbreak of the melamine adulteration scandal in 2008 caused a Chinese buying frenzy of overseas infant formula while the domestic products became overstocked,which made national dairy industries stranded.This implies that the food safety incidents may influence the import trade of agricultural products,and can have a big impact on national agricultural industry chains.So far,the effect of food safety incidents on import trade of agricultural products and s4ocial welfare have not aroused much academic and public concern.Therefore,it is of great realistic and theoretical significance to explore these issues in depth:whether the food safety incidents can lead to the increase import of agricultural products;how it influence the import trade of the food safety incidents;how much it affects the social welfare;and how to deal with the effects of the food safety incidents on import trades,etc.Firstly,based on the theory of credence goods,collective reputation and industry effect of crisis,this dissertation uses the analysis framework of expanded Hoteling model and evolutionary game to theoretically analyze the economic origin and influence mechanism of the import trade and social welfare that food safety incidents have.Secondly,the synthetic control method is applied to estimate the changes of China's per capita dairy imports on the basis of demonstrating the melamine adulteration scandal and the representation of the affected industries;and Difference-in-Difference estimation is also used to test the reliability of the conclusion that the melamine adulteration scandal increases the growth of China's dairy import.Furthermore,this dissertation applies co-integration theory to measure the influence of purchasing price of fresh raw milk and selling price of packaged fresh milk caused by the melamine adulteration scandal.And on this basis it uses Minot welfare effect model to evaluate the effect of falling price caused by the melamine incident,on rural and urban residents' welfare.Finally,it implements Netlogo to simulate the import trade effect and social welfare of food safety incidents in different policies circumstances,including different minimum quality standards,customs duty rate,market access system,etc.;in order to provide a reference for intensifying food safety management and dealing with food safety incidents.The main conclusions are:Firstly,the attribute of credence goods for food quality accounts for the collective reputation of food industry,and further leads to the contagion intra-industry effect of food safety incidents.In an open economy,the competitive effect and contagion effect of food safety incidents characterizes by import trade effect and welfare effect.Secondly,from 2009 to 2013 China's per capita dairy imports increases by 32.86%,61.06%,55.15%,58.83%and 72.92%respectively due to the melamine adulteration scandal in 2008.This means that the crisis of confidence triggered by major food safety incidents will exist over long periods and will aggravate the potential risk brought about by long-term supply safety of China's agricultural products owing to the rapidly expanding agricultural trade deficit.Thirdly,the melamine adulteration scandal caused a welfare loss to rural and urban residents,but the loss was greater to rural residents.The rural residents suffered an average welfare loss of 0.217%owing to the melamine adulteration scandal,the counterpart of urban residents is about 0.0096%.Fourthly,the optimal threshold for minimum quality standards and the strict market access system can alleviate the import trade effect of food safety incidents as well as reduce the welfare loss;and the customs duty rate can alleviate the import trade effect of food safety incidents but the effect was little.The originality of this dissertation lies in that:(1)it theoretically analyzes the economic origin and influence mechanism of the import trade and social welfare that food safety incidents have;it fills the gap of the relevant research that focuses on summary of experience over rigorously economic theoretical analysis;and it also reveals the dynamics game processes during consumer behavior,producer behavior and government supervision behavior.(2)the synthetic control method is applied to estimate the changes of China's per capita dairy imports,stripping out the impact of internal factors(e.g.domestic supply and demand changes of China's dairy imports)and external factors(e.g.financial crisis).This could cover the shortage of the estimate method in existing available literatures by mutually eliminating both the external and internal factors and could make a more relatively accurate assessment of the impact on China's per capita dairy imports.(3)on the basis of theoretical analysis,the study uses Minot welfare effect model to evaluate the effect of purchasing and selling price of fresh milk caused by the melamine adulteration scandal,and then to evaluate the effect of rural and urban residents' welfare.The result offers a new insight into the empirical study on evaluating the effect of food safety incidents on social welfare.(4)by designing Agent-based complex system,the study implements Net-logo simulation platform to set up a simulation system for the import trade effect and social welfare of food safety incidents in different policies circumstances.This can provide a reference for testing the reliability of different safety measures to deal with food safety incidents.