Institutional Economics Analysis On How Brand Mechanism Promotes Food Safety

The food safety issues have emerged in an endless stream, caused tremendous losses, to which great attention has been paid by both the government and society. Effective solution of these issues is urgently needed. Some literature emphasize on the government's supervision and enforcement of law. However, the limitation and imperfection of the government and law cannot solve these issues. Other literature emphasizes the role of market mechanism, but their research still stay in the stage of description. And they have not put forward the concrete measures. Hence, under the existing environment of the government and law, what effective measure should be proposed, which focused on the role of market mechanism. This paper aim's to discuss the food safety issues by considering the role of the market mechanism.Enterprises compete not only in term of their products, but also their brand. This study analyses the food safety issues from the perspective of transaction cost approach, paying special attention to the role of brand mechanism to ensure food safety. The object studied in this paper studies the food supply chain and food consumers. It deals with the food safety issues, brand, transaction costs, and the relationships between them. It consists of two parts: theoretical and empirical parts.Theoretical part discusses the brand mechanism and the relationship between brand and transaction costs, then analyses its role in ensuring food safety from the perspective of transaction cost approach. Empirical research composed of a case study and econometric study. The case study of the brand of "Xiao Cai Yi Die"(a small dish of food) described the operation of the brand and its advantage in assuring food safety and saving transaction costs. The inspiration has been summarized by the case study. The empirical study conducted the consumers'survey to get first-hand data. The statistical analysis supported the basic ideas of the paper.The study concluded that the good operation of brand mechanism can ensure food safety and reduce transaction costs along the food supply chain. Policy suggestions and implications have been put forward by the end of the paper.