Traceability , food safety and industry reputation ∗

Sometimes authorities are unable to identify the origin of a tainted food product. In such cases, food recalls or warnings are often applied to all suppliers which means that the recall applies to suppliers of products that do not contribute to the contamination. One benefit of traceability is to enable more targeted recalls, identifying more specifically the product’s origin. In this article, we show how increased traceability contributes to protect the reputation of industries by potentially limiting the size of product recalls. Furthermore, we show the relationships between the optimal degree of traceability and the level of food safety for identical farms in a competitive industry and for an industry using collective action to set rules and standards.