Can an Industry Voluntary Agreement on Food Traceability Minimize the Cost of Food Safety Incidents?

In the recent past the United States has had a number of severe food-safety outbreaks in the produce, vegetable and beef industry that greatly disrupted the food system. In all these outbreaks here were severe disruptions on sales that affected the whole industry, and it took an extended period of time to correctly locate the source of the outbreak. Traceability can be an effective tool to reduce the impact of food safety incidents my expediting the search for the origin of outbreaks. This paper investigates to what extent an industry-led voluntary agreement for providing traceability can reduce the cost of a food-safety outbreak. We find that a voluntary agreement on traceability can successfully reduce the cost of a food-safety outbreak but will unlikely achieve the optimal social level of traceability because of significant free riding