The Economics of Traceability for Multi-Ingredient Products: A Network Approach

The consumption of multi-ingredient foods is increasing across the globe as consumers spend less time preparing meals. Traceability is now extensively used to reduce information imperfections in food markets and recent EU law suggests it will be implemented for manufactured meals as well. We present a model developed to understand how information on different ingredients flows through supply chains for multi-ingredient food products. The network model has three tiers linked by contracts for levels of quality and information. The model is useful for analyzing tradeoffs and network effects emerging in the choice of traceability levels.