Agric. Econ. - Czech, 2014, 60(7):301-308 | DOI: 10.17221/115/2013-AGRICECON

A general equilibrium analysis of food industry considering the food qualityOriginal Paper

Pu-Yan NIE1, You-Hua CHEN2
1 Institute of Industrial Economics and Institute of Resources, Environment & Sustainable Development, Jinan University, Guangzhou, P.R. China
2 College of Economics and Management and Guangdong Center for Rural Economic Studies, South China Agricultural University, Guangzhou, P.R. China

By establishing a dynamic equilibrium model, the paper analyses the equilibrium of the food industry and the equilibrium about the food quality as well as quantity is achieved. Firstly, the study examines the effects of competitions on the price, outputs, profits and social welfare. The authors argue that competition reduces the food quality. Secondly, this paper shows that consumers benefit from the quality regulation while producers undertake a loss. Moreover, social welfare first increases then decreases with the regulation. Thirdly, the optimal quality regulation is presented and a higher quality regulation reduces competition, while the lower quality regulation promotes it. Finally, the effects of fixed costs on the equilibrium number of firms in the corresponding industry are captured.

Keywords: equilibrium number, fixed costs, game theory, quality regulation

Published: July 31, 2014  Show citation

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NIE P, CHEN Y. A general equilibrium analysis of food industry considering the food quality. Agric. Econ. - Czech. 2014;60(7):301-308. doi: 10.17221/115/2013-AGRICECON.
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