Food safety inspection and the adoption of traceability in aquatic wholesale markets: A game-theoretic model and empirical evidence

Supply chain traceability is key to reduce food safety risks,since it allows problems to be traced to their sources. Moreover,it allows regulatory agencies to understand where risk is introduced into the supply chain,and offers a major disincentive for upstream agricultural businesses engaging in economically motivated adulteration. This paper focuses on the aquatic supply chain in China,and seeks to understand the adoption of traceability both through an analytical model,and empirical analysis based on data collected through an extensive (largest ever) field survey of Chinese aquatic wholesale markets. The field survey includes 76 managers and 753 vendors,covering all aquatic wholesale markets in Zhejiang and Hunan provinces. The analytical and empirical results suggest that the adoption of traceability among wholesale market vendors is significantly associated with inspection intensity,their individual history of food safety problems,and their risk awareness. The effect of inspection intensity on traceability adoption is stronger in markets which are privately owned than in markets with state/collective ownership. The analysis offers insights into the current state of traceability in China. More importantly,it suggests several hypothesized factors that might affect the adoption of traceability and could be leveraged by regulatory organizations to improve it.

Experiences of the Electricity System Operator Incentive Scheme in Great Britain

National Grid is the electricity system operator in Great Britain and has an unique feature in so far as it is one of the world’s few for-profit system operators. In addition, the commercially orientation of the British market rules means that nearly every action taken by National Grid to operate the system has a cost associated to it. Based on those factors and in order to encourage National Grid to seek continuous improvements and drive for efficient and economic system operation, the regulator (Ofgem) offers an incentive scheme, whereby a target is agreed annually and any savings in relation to this target are shared between consumers and National Grid in the form of a profit. It is in National Grid’s best interest to have mechanisms to mitigate the impacts of volatility in the costs it faces as system operator so that it can implement cost saving actions without the risk of windfall losses (or gains) arising from sudden changes in uncontrollable drivers. The purpose of this paper is to share the experiences of National Grid in the operation of Great Britain's electricity system, with a special interest on the mechanisms created to manage the associated costs in response to the incentive scheme. It does so by describing the market operation in Great Britain and the costs drivers impacting National Grid’s system operation and illustrating the steps recently taken by National Grid to propose volatility mitigation mechanisms. It concludes with the rationale and expected results from the latest proposals as consulted with the industry for introduction in the incentive scheme starting on 1st April 2011. It is worth noting that with this work, the authors wish to both share the experience with other system operators and regulators in the world, as well as give British market participants an insight on the inner workings of National Grid.