The Strategic Use of Private Food Safety Standards to Manage Complexity: a Moral Hazard Perspective
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Private food safety standards (PFSS) are widely adopted by firms in the agri-food system, as they
meet an increasing consumer demand for safety and quality. Yet, recent economic literature found
that PFSS might serve other purposes than just ensuring food safety. Our paper contributes to this
literature, framing PFSS within a contract-theory model. We conclude that PFSS can be used to
lower the coordination costs along the supply chain and that their effects go beyond ensuring the
production of quality and safety attributes. The model shows that PFSS can reduce the cost of
solving moral hazard problems for non-discriminating buyers facing heterogeneous suppliers.