On Quality Investment Incentive And Food Safety Governance Mechanism

In recent years, the frequent outbreak of food safety in our country has caused the social extensive concern of the consumers and the government. As the critical area that concerns the whole society’s consumer health, how to provide consumers with a safe, reliable and trustworthy food market consumption environment became an important issue. In order to strengthen the supervision of the food market, perfect the legislation in the field of food, our country has issued a strict "food safety law of the People’s Republic of China, at the same time, the Chinese government takes the administrative measures to crack down on those inferior food production enterprises in the food market, hopes to improve food safety, high quality food supply to increase, and inferior food production enterprises to exit the market constantly. However, despite the strict measures were taken, our country’s food safety problem has not been effectively improved. In terms of food safety issues, besides the government’s regulation measures, a market mechanism should play the leading role. Therefore, to improve China’s food safety we need take measures from the perspective of the market mechanism.Food safety problem’s nature is the supply and demand of food quality problem. Frequent outbreak of food safety problems are because food production enterprises in the food market don’t provide effective supply of high quality food under the premise of consumers’having different preference towards different quality, which is based on the principle of profit maximization, but provide a large amount of low quality food. Therefore, in order to analysis the problem of supply and demand of food quality from market mechanism, this paper uses the quality model that takes the quality factor into the consumer’s utility function, and constructes the consumer demand function for different quality food and food manufacturers profit function for different quality.Under the function of market supply and demand, when the market reaches equilibrium, consumers get maximum utility, food production enterprises get maximized profits. In this paper, by analyzing the choices of food production enterprises and consumers under the condition of the profit maximization and utility maximization to analyze the supply condition of different quality food in the food market and the reasons for the less supply of high quality food.Through theoretical modeling, found that if we do not consider the cost to improve the quality of food, and changes in consumer income level. At this point, under the market mechanism, the food in the market for high quality food production enterprise and the low quality food production enterprise can both get a certain amount of profit. And high quality food production enterprises and low quality food production enterprise’s maximum profit both have positive correlation with food quality. At this point, food manufacturers of high quality have enough motivation to produce and supply high quality food. However, considering the cost to improve the quality of food and consumer income level change and other factors, this article found that for high quality food production enterprises, if high quality food production enterprises improve the quality of food that pay high cost of technology, then under the given requirements, high quality food production enterprise is likely to be unprofitable, or even negative profit, so as to make the high quality companies quit the high quality food production areas; besides the supply technology costs, demand of consumer income also affects the behavior of food production enterprises. With the continuous improvement of consumer income level, the price adjustment range of consumers’willingness to pay for the quality will continue to move up. As price adjustment range of consumers’willing to pay for the quality rise, high quality food production enterprise profits will be increased, and its profit growth will be higher than that of low quality food production enterprises. Therefore, the main factor that influences the high quality food supply in China is the high cost to produce high quality food, and the low income and consumption level of our country’s residents, leading to price adjustment range of consumer willingness to pay for the quality turns small.These two factors make high quality food enterprises in the food market to provide quality food become unprofitable. In general, if the high quality food production enterprises in the food market are unprofitable,so high quality food production enterprise will quit the high quality food production areas, the food market will be full of inferior food. To this point, even if the government implements strict food safety regulation,it is also difficult to change the enterprise profit maximization behavior choice.This paper is divided into six parts, the first part is the introduction, introduced this article selected topic background, significance and the domestic and foreign research situation of food safety issues; The second, third and fourth parts are the main theoretical models. These three parts are introduced in the market equilibrium under the condition of consumer behavior and the enterprise profit maximization behavior, and analyzed the market equilibrium, different quality of food production enterprises’profit distribution; The fifth part mainly analyzed the paradox of the market, and analyzed the main reasons for these paradoxes. The sixth part is the relevant conclusions in this paper, and the discussion of food market governance mechanism, the theoretical foundation of the governance mechanism is how to incentive food quality manufacturers for high quality food production from a different view of the profit maximization.