Food Market Failure Under The Restriction Of Natural Resources And Its Correct

The research analyzes food market failure in use of the equilibrium theory of neoclassical economics, information economics, and welfare economics. Food market can be subdivided into food quality and safety area in accordance with the industrial chain. The research focuses on the food quality in terms of food material market.In part of theoretical analysis, we assumed that natural resource is hard constraints. Also, natural resource inputs determine the quality of food material. High-income consumers have a higher preference for high-quality food. Then the market equilibrium model can be drawn. With the demand of food material market expand, farmland rental price will follow a sharp rise, and thus to encourage producers to seek and implement resources of alternative technologies. As the assumption that alternative resources technologies are often the quality of alternative ones, the food material market exist different quality products. What is more, in a multi-quality food material market there will be a critical income level, which only the income exceeds, consumers will choose high-quality goods, In case of incomplete quality information, high-quality prices will be higher than that of full information in case of the payment of the cost of signaling. Therefore, new technologies in food material is not Pareto improvement, with overall consumer income levels increase, total social welfare effects of such technological advances ultimately may be negative, that means market failure.In part of empirical analysis, the research analyzes data of agricultural production and consumption, as well as some interdisciplinary natural science and the experimental data. To a certain extent, they can support the above assumptions and conclusions.The policy implications include, government should intervene the development and sharing of quality information in order to reduce the cost of quality information for high-quality producers. Government based on public research institutions makes careful selection and moderate restriction. When it is necessary, government can limit the number of downstream processing of food industry in order to control the excessive demand appropriately.