How Do Spillover Effects Influence the Food Safety Strategies of Companies? New Orientation of Regulations for Food Safety

Abstract

The food safety strategies of companies are a key point in the reduction of food safety risks. In order to encourage the evolution of food safety strategies of companies from food fraud to safety investment, this study builds an evolutionary game model, taking large and small companies as participants, to reveal the dynamic process of spillover effects influencing the choice of food safety strategies of companies. The study shows that (1) the food safety strategies of companies change from safety investment to food fraud, along with the increasing opportunity costs of safety investment. (2) The costs structure of small companies mainly determines whether the industry reaches the equilibrium of safety investment, while the costs structure of large companies mainly determines whether the industry reaches the equilibrium of food fraud. (3) Both competition effects and contagion effects encourage companies to choose safety investment. The more obvious spillover effects of incidents on food safety are, the more likely it is that companies will choose safety investments. (4) Increasing the costs to companies for incidents on food safety and reducing the opportunity cost of safety investment motivates companies to choose safety investment. Consequently, a new orientation of regulations for food safety is formed: the government should allocate different regulatory resources to counteract food fraud behaviors or technologies with a different benefit, should increase the technical costs and costs incurred from committing acts of food fraud, and should expand spillover effects of incidents on food safety.