Analysis Of Food Safety Problems: Based On An Credence Goods Repeat Purchase Model

Now in China a mention of food safety problem can always lead to people and government's intension. One of the main reasons of the food safety accidents is that the sellers in food industry usually owns the superiority of the information. According to this phenomenon many scholars has put forward their own proposal and theory. One of the main point of view of these advices is that to solve the problem, the government and social external supervision have to be strengthen, or reshape consumers's faith of the food quality to prompted companies to complete supervision of their food qualityAccording to these advices just mentioned and the theroy of information asymmetry,thispaper is trying to make sure that if the strengthening of government external supervision can promote food manufacturers to show their own signals of food quality.An important assume is that in a two stage purchase model the probability of food safty accidents is positive, in order to maximize their profits food production enterprise need to set prices and make a appropriate strategy to show their food quality signals. In this process,the conditions of separating equilibrium and pooling equilibrium are analysed. The concluded is, under some assumptions whether Improving some consumer's income level or inhencing external supervision will have positive effects to food suppliers to show their own products information.In this paper there are two different kind of consumers they are high quality consumers and low quality consumers.If the proportion of high quality consumers is lower than the low quality consumers when the income level of low quality consumers reach to a certain standard, food suppliers would willing to show their production's signals if consumer's feith of food quality is enhanced.On the other hand if this proportion is relatively high between two kind of consumer, non of these approach worked.So should the proposal "enhance the external supervise"be used in the real world, it has to be decided according to the real situation.This essay is divided into four chapters.The first chapter is an introduction of the writing motive,thought as well as some background information.The second chapter introduced the repeat purchase experience goods model and the theory of credence goods expert service.The third chapter set up a two period model,it involved two types of consumers and two types of manufacturers,then analysed separating equilibrium and pooling equilibrium of this model.The last chapter is a conclusion.