Traceability, Liability and Incentives for Food Safety and Quality

In this paper we focus specifically on the implications for additional traceability in the context of liability for food safety problems. We model formally the linkage between traceability and food safety and establish the implications of an increase in traceability-liability for food safety and related economic outcomes. The capacity to trace the origin of food increases the possibility of legal remedy and compensation in case of food safety event. Traceability also allows parties to more easily document that they are not responsible for harm. Therefore, traceability systems create incentives for firms to supply safer food.