Study On Legal Countermeasures Of Principal-agent Problems In China's Food Safety Supervision At The Source End

As one of social regulations, the effect of food safety regulation is shown in all aspects and their internal mechanism from the formation of laws and regulations on food safety supervision and management of government's, the performance of regulative function by the supervising subjects to the adjustment and correction of supervisory behaviors. Horizontally, mainly in the mode of separated supervision, the allocation of power for China's food safety supervision and management is spread out across many different supervising subjects. Vertically, based on the basic principle of state supervision and local regulation, the regulative power is in the hands of local governments. Local governmental departments at all levels, including health, agriculture, food and drug supervision, environmental protection, while accepting business guidance from higher level departments, they are directly led by local governments. From the perspective of information economics, all supervising subjects involved in such regulative progress are merely the power agents for the public and their relation with the public, the entrusting party, is a principal-agent relationship since they accept the entrustment from the public and exercise their food safety supervision and management power. Along with the constant differentiation and evolution of interest structure of the local's, local governments at all levels have gradually evolved into a relatively independent stakeholder and the order and obedience relation between the conventional supervisor and subordinate governments is being replaced by the “principal-agent” relationship driven by objective function of the self-interests of local governments. Moreover, during the process of regulating food safety by the government, the entrusting party can not observe the acts of agent directly and is in an inferior status for information acquisition. They can only observe corresponding results after the contract has been concluded. Therefore, this relation is a moral hazard model with behaviors hidden. The agent in this model is extremely likely to incur “adverse selection” and “moral hazard” that deviates the objective function of the entrusting party. The supervision and management effect for China's food safety supervision and management at the source end is being influenced by the principal-agent puzzle brought by such principal–agent relation, wherein the existing characteristics, such as unclear entrustment order, overlong principal-agent link and multi-agents, have resulted in a number of problems found in the supervision departments, including regulatory capture and low supervision and management efficiency. Based on the analysis of our legislation on food safety supervision and management at the source end and the status quo of our regulatory system, it is recommended that we should carry out in-depth study on the system cause of existing problems using the principal-agent theory, hence to solve the “moral hazard” during supervision and management at the source end. Apart from the Introduction, this paper can be divided into 3 parts.Part 1-Introduction, which is intended to explain the topic selection background and significance of this paper, introduce the innovative points and research methods, sort out and conclude the literatures for corresponding research.Part 2-Principal-agent Relationship in China's Food Safety Supervision and Management at the Source End and Its Characteristics, which has analyzed the feasibility for us to apply the principal-agent theory into food safety supervision and management at the source end and has concluded the advantage in terms of their applications between principal-agent theory and existing theoretical basis for China's food safety regulations through our deep understanding and exploration of the main content of the principal-agent theory. Thereafter, through combing through the principal-agent links between all subjects under existing regulatory system, it has concluded a number of existing characteristics, including unclear entrustment order, multi-level agents, lack of original principals and incomplete principal-agent relationship.Part 3-“Principal-agent” Problems in China's Food Safety Supervision and Management at the Source End, which has analyzed and pointed out the existing “principal-agent” problems in China's Food Safety Supervision and Management at the Source End in combination of both the legislation on food safety supervision and management at the source end and its practical status, and the characteristics abovementioned in Part2.Part 4-Legal Measures and Suggestions for the Improvement of China's Food Safety Supervision and Management at the Source End. In this part, regarding the “principal-agent” problems in China's food safety supervision and management at the source end, on the basis of drawing on the experiences from foreign countries, it has put forward a number of suggestions, including the perfection of legislation, inclusion of public interest litigation, integration of regulatory authorities at the source end, adoption of coordinated supervision mode, play the role of social force, strengthen the risk information exchanging so as to solve our existing food safety issue and meet the public's demand for safety in a better way.