Elodie Rouvière
email: elodie.rouviere@agroparistech.fr

Julie A Caswell
email: caswell@resecon.umass.edu

From punishment to prevention: A French case study of the introduction of co-regulation in enforcing food safety

Keywords: Food Safety, Co-regulation, Enforcement, Import Safety

In the last decade, the concept of co-regulation has been developed and increasingly promoted as an important instrument of regulation. In the context of food safety, we examine coregulation programs from the point of view of an enforcement agency. We develop a conceptual framework of enforcement of food safety regulation for use in assessing the degree of shift toward co-regulation from traditional approaches and apply it to a case study of the French import market for produce at Perpignan. We find that co-regulation in the enforcement of pesticide residue limits resulted in a change of practices for the regulatory agency from punishment to prevention based on incentives and information programs.

environments. Here we examine the use of new co-regulation schemes focusing on a specific type of co-regulation where regulations are set and designed by public authorities and then enforced by the coordinated actions of public authorities and food operators or "enforced selfregulation". We look at this type of co-regulation primarily from the point of view of regulatory agencies. The first section of the paper provides a broader context for the definition of co-regulation and discusses rationales for its emergence as a means of giving more responsibility to food operators. The following section presents a conceptual model of enforcement of food safety regulations adapted from [START_REF] May | Making Sense Out of Regulatory Enforcement[END_REF] that highlights the shifts in philosophy and approach that co-regulation may require of regulatory agencies.

Based on a case study of experience in France, we find in the following section that the introduction of a co-regulation enforcement regime did induce changes in the enforcement practices of the regulatory agency. In turn, these changes in practices result in a shift from economic incentives based on punishment to incentives based on prevention. The last section provides concluding remarks and policy implications regarding modes of co-regulation for food safety.

Why is co-regulation emerging?

The concept of co-regulation was developed over the last two decades and is applied to a range of economic activities. The development mostly focuses on potential complementarities between public and private activities, and potential gains from coordination of these activities, in circumstances where there may be market failure (public goods, information asymmetries, etc.). Researchers have explored these potential complementarities and gains from coordination in many different institutional environments and areas of regulation including environmental protection [START_REF] Gunningham | Smart Regulation: Designing Environmental Policy[END_REF]), e-commerce [START_REF] Goldsmith | Who controls the Internet?[END_REF], media [START_REF] Dordeck-Jung | Contested hybridization of regulation: Failure of the Dutch regulatory system to protect minors from harmful media[END_REF], and food safety [START_REF] Garcia-Martinez | Co-regulation as a possible model for food safety governance: Opportunities for public-private partnerships[END_REF].

The introduction of these new regulatory tools has also launched a wide discussion among scholars. For instance, [START_REF] Black | Decentring Regulation: Understanding the Role of Regulation and Self Regulation in a 'Post-Regulatory[END_REF] provides a core debate on the emergence of this new type of regulation arguing that it has changed the whole understanding of regulation per se. She discusses self regulation as a solution to the limits of command and control and highlights the importance of managing this novel regulatory tool as it becomes more broadly used.

However, the definition of co-regulation often lacks clarity and varies among scholars, regulatory agencies, and institutions. [START_REF] Eijlander | Possibilities And Constraints In The Use Of Self-Regulation And Co-Regulation In Legislative Policy: Experience In The Netherlands -Lessons To Be Learned For The EU?[END_REF] defines co-regulation as an approach in which a mixture of instruments is brought to bear on a specific problem. Co-regulation therefore emphasizes coordination between public and private agents in the regulatory process [START_REF] Eijlander | Possibilities And Constraints In The Use Of Self-Regulation And Co-Regulation In Legislative Policy: Experience In The Netherlands -Lessons To Be Learned For The EU?[END_REF]. This coordination in the field of regulation may result in various forms of governance, such as agreements, conventions, and even regular laws. For [START_REF] Gunningham | Industry Self Regulation, An institutional Perspective[END_REF], regulation can be perceived as consisting of a continuum ranging from detailed command and control regulation to pure self-regulation (no intervention) that can involve coregulation. [START_REF] Sinclair | Self-Regulation versus Command and Control? Beyond False Dichotomies[END_REF] also suggests there is a rich range of policy options somewhere along the spectrum between these ends. According to the Organisation for Economic Cooperation and Development (OECD) (2002), the regulatory role is shared between government and industry under co-regulation. [START_REF] Ayres | Responsive Regulation, Transcending the Deregulation Debate[END_REF] define coregulation as industry self-regulation that government oversees and/or ratifies. As noted above, [START_REF] Coglianese | Management-based regulation: prescribing private management to achieve public goals[END_REF] and [START_REF] Fairman | Enforced Self-Regulation, Prescription, and Conceptions of Compliance within Small Businesses: The Impact of Enforcement[END_REF] respectively refer to "management-based regulation" or "enforced self-regulation".

The food safety literature has widely addressed the issue of complementarities between food operators and public regulation in better providing and monitoring food safety. These complementarities increasingly have been promoted through changes in food safety regulations giving food operators more responsibility for food safety. Scholars have focused on the private incentive aspects of complying with food safety regulation. Food operators balance the costs and benefits of implementing procedures to comply with food safety regulations, choosing from a continuum that ranges from full compliance to non-compliance [START_REF] Henson | Food Safety Regulation and the Firm: Understanding the Compliance Process[END_REF]. They also assess their costs and benefits relative to internal (resources) and external (reputation, penalties) incentives. They adopt safety measures according to their budget constraints, their strategies, and the structure of the market [START_REF] Loader | Strategic Responses to Food Safety Legislation[END_REF].

As noted, there is a consensus that co-regulation lies somewhere in the middle between command and control intervention and no intervention (see, e.g., [START_REF] Garcia-Martinez | Co-regulation as a possible model for food safety governance: Opportunities for public-private partnerships[END_REF][START_REF] Sinclair | Self-Regulation versus Command and Control? Beyond False Dichotomies[END_REF][START_REF] Black | Decentring Regulation: Understanding the Role of Regulation and Self Regulation in a 'Post-Regulatory[END_REF]. Command and control intervention results in regulatory requirements for firms that are administered and enforced by public authorities. No intervention refers to situations where there are no specific regulatory requirements for firms.

In such a case, pure self-regulation may emerge. In these schemes, rules are set, administered, and enforced by firms on themselves [START_REF] Nunez | Can Self-Regulation Work? A Story of Corruption, Impunity and Cover-Up[END_REF]. It is often implemented through private incentives to industry [START_REF] Bartle | Self-regulation and the regulatory state: A survey of policy and practices[END_REF]. Some scholars who deal with food safety and quality consider pure self-regulation schemes in food safety or quality as private standards (e.g. [START_REF] Garcia-Martinez | The Development of Private Fresh Produce Safety Standards: Implications for Developing Mediterranean Exporting Countries[END_REF][START_REF] Henson | Private agro-food standards: Implication for food policy and the agro-food system[END_REF][START_REF] Fulponi | Private Voluntary Standards in the Food System: The Perspective of Major Food Retailers in OECD Countries[END_REF]. However, the distinction between self-regulation and co-regulation lacks clarity. According to [START_REF] Bartle | Self-regulation and the regulatory state: A survey of policy and practices[END_REF], the main criterion of co-regulation is the cooperation between public authorities and firms in the regulatory process. [START_REF] Sinclair | Self-Regulation versus Command and Control? Beyond False Dichotomies[END_REF] proposes regulatory variables that can be used to better match regulatory options with particular regulatory issues. For instance, [START_REF] Gunningham | Policy instrument choice and diffuse source pollution[END_REF] consider different policy options to provide the ideal regulatory outcome for agricultural non-source pollution.

Co-regulation may arise in the process of creating new legislation or regulatory rules by incorporating the opinions of companies, consumers, voters, non-governmental organizations, and other stakeholders. The purpose of enforcement in food safety regulation is to monitor and enforce compliance from companies; it is the responsibility of regulatory agencies. According to [START_REF] Bartle | Self-regulation and the regulatory state: A survey of policy and practices[END_REF], co-regulation in enforcement involves all modes of regulation in which regulations are designed and set by public authorities and enforced by the coordinated actions of public authorities and regulated firms. An example is a voluntary agreement that takes the form of a common set of good practices supported by the government that promotes company compliance with regulatory requirements. According to this definition, "enforced self-regulation" [START_REF] Ayres | Responsive Regulation, Transcending the Deregulation Debate[END_REF][START_REF] Coglianese | Management-based regulation: prescribing private management to achieve public goals[END_REF][START_REF] Fairman | Enforced Self-Regulation, Prescription, and Conceptions of Compliance within Small Businesses: The Impact of Enforcement[END_REF] appears similar to this concept of co-regulation. [START_REF] Henson | Food Safety Regulation: An Overview of Contemporary Issues[END_REF] distinguish between three types of standards according to the level of flexibility they offer to food operators. Imposing a general target standard puts fewer constrains on the behaviour of food operators. Public authorities do not define a specific safety level for the product or the process. The pressure from public authorities comes from liability the firm may experience when there is a product defect that causes damages to consumer health. With performance standards (e.g., pathogen counts for products at some stage of the supply chain), public authorities require food operators to achieve prescribed product quality standards but the means to reach the standard are not specified by the authorities. Specification standards are the most stringent. Under them public authorities define how food operators must produce the product. Food operators who fail to reach the standards commit offenses that usually result in sanctions.

The emergence of co-regulation in enforcement generally corresponds to a shift from specification to performance standards and may involve an increased or reduced reliance on target standards (liability). [START_REF] Lee | The Globalization and Re-localization of Material Flows: Four Phases of Food Regulation[END_REF] describe the roots of the co-regulation dynamic in food safety regulation in the United Kingdom. They argue that the Food Safety Act in 1990, which placed more responsibility of private parties, was the first step in the development of co-regulation in food supply chains where private interests and contracting in global markets take a prominent place. As a consequence, private regulation of food quality and food safety has been stimulated through the emergence of private standards owned by retailers. These and subsequent developments have modified the whole organisation and governance of the supply chain in providing and monitoring food safety [START_REF] Fulponi | Private Voluntary Standards in the Food System: The Perspective of Major Food Retailers in OECD Countries[END_REF].

In the United States, prior to 1996 most food regulation required food operators to implement specification standards. This began to change with the adoption of mandatory Pathogen Reduction-Hazard Analysis Critical Control Points (PR-HACCP) for the meat and poultry industries [START_REF] Loader | Strategic Responses to Food Safety Legislation[END_REF]. In connection with the new regulation, the Food Safety and Inspection Service developed a series of guidebooks on how to implement PR-HACCP to assist firms in complying. HACCP was then implemented by the U.S. Food and Drug Administration for the seafood industry in 1999 and for some juices in 2001. Similar developments have occurred in Europe. In 2001, European Regulation (EC) No 178/2002, also called the "Food Law," was issued. It is characterised by the increased involvement and responsibility of private actors with regard to food safety controls. For example, since 2001 importers of fresh produce have been responsible for safety controls within their firms and therefore must implement a system of self-monitoring aimed at checking whether imported products satisfy the Maximum Residue Limits (MRLs) for pesticides defined by European law [START_REF] Rouvière | Heterogeneous Effort in Voluntary Programmes on Food Safety: Theory and Evidence from the French Import Industry of Fresh Produce[END_REF].

The emergence of co-regulation as a novel regulatory tool to enhance compliance from food operators in enforcement of food safety regulations is widely acknowledged. For example, the U.S. Food and Drug Administration's Food Protection Plan (2007) calls for promotion of increased corporate responsibility to prevent foodborne illness. From a policy perspective, it is important to understand the forms that co-regulation is taking in enforcement and to analyze its impacts.

A framework for analyzing co-regulation in regulatory enforcement regimes

The literature on enforcement has widely addressed enforcement regimes taking regulatory agencies as the unit of analysis. As noted above, co-regulation can take many forms when incorporated into enforcement regimes. Co-regulation can be all the possible combinations between public and private mechanisms leading to a novel regulatory tool which can be implemented to help food operators to become compliant with regulations. For instance, as suggested by [START_REF] Fairman | Enforced Self-Regulation, Prescription, and Conceptions of Compliance within Small Businesses: The Impact of Enforcement[END_REF], free education and advice approaches might be used by regulatory agencies to increase compliance. We hypothesize that adoption of a coregulation approach leads to systematic changes in enforcement regimes.

Regulation may be ex-ante in the form of regulatory standards and enforcement or ex post in the form of liability. We focus on ex-ante regulation. Figure 1 presents an analytical framework for mapping and assessing changes in ex-ante enforcement regimes adapted from [START_REF] May | Making Sense Out of Regulatory Enforcement[END_REF]. [START_REF] May | Making Sense Out of Regulatory Enforcement[END_REF] divide the enforcement regime for ex ante regulation into three parts.

•

Enforcement philosophy: the role an agency plays in inducing companies to comply with regulatory requirements. [START_REF] May | Making Sense Out of Regulatory Enforcement[END_REF] distinguish between reactive and proactive approaches. The two differ in their purpose and how public authorities react when they detect that a regulatory offence has occurred. A reactive approach seeks to identify food operators that do not comply with regulations and penalize them with sanctions. A proactive approach seeks to implement measures that are necessary to avoid a breach of the regulation, including, for example, education and coaching. It is a preventive approach to inducing compliance from firms.

• Enforcement strategy: how the agency combines its practices in order to induce company compliance. Enforcement strategies are classified into two broad categories. Strict enforcement relies on strict application of rules, with inspections carried out in order to punish major regulatory offences. Creative strategies promote compliance through, for example, the use of market incentives or relaxed inspections.

• Enforcement practices: the different sets of practices available to regulatory agencies to enforce regulations. These are discussed in detail below.

As shown in Figure 1, the framework puts analysis of enforcement practices at the center. Again following May and Burby, we use analysis of the observed enforcement practices implemented by a regulatory agency to draw conclusions about the underlying enforcement philosophy and strategy. The major classes of enforcement practices analyzed are inspections, information, and sanctions.

Inspections: There are two types of inspections that a public agency can implement for enforcement of food safety regulations. First, official inspections can be performed by regulatory agencies through formal and random or scheduled on-site visits. The focus of these inspections may be product or process-oriented. Product-oriented inspections focus on the safety level of the product (e.g., pathogen counts for products at different stages of the supply chain, the level of pesticide residues in produce) and occur before or after the release of the product on the market. Process-oriented inspections focus on the procedures that food operators have implemented to prevent food safety failure. Inspections are intended to deter food operators from failing to perform the appropriate procedures.

Second, official inspections may be carried out through self-reporting or registration.

Self-reporting allows for second level inspections where regulatory agencies evaluate a firm's compliance by monitoring its records. Based on individual records, enforcement agencies can assess a firm's internal rules (testing, corrective procedures, and actions taken) and check whether firms have implemented their quality/safety management system correctly. Under registration, regulatory agencies implement third level inspections where they assess food operators' compliance through formal verifications made by third party accreditors.

Enforcement agencies may support such third party accreditation bodies by issuing quality labels or signals for firms that have achieved a certain standard (e.g., organic production).

Information:

The source of a firm's non-compliance often is a lack of knowledge and understanding of regulation principles and compliance processes [START_REF] Fearne | Exploring Alternatives Approaches to Traditional Modes of Regulation of Food Safety[END_REF].

Reliable information and education/training programs may be a good means to achieve high rates of compliance [START_REF] Fearne | Review of the Economics of Food Safety and Food Standards, Document prepared for the Food Safety Agency[END_REF]) by promoting the potential gains in business performance from compliance [START_REF] Fearne | Exploring Alternatives Approaches to Traditional Modes of Regulation of Food Safety[END_REF]. Technical support programs are designed to help food operators find and implement effective ways to achieve the required food safety level at least cost. Information programs take multiple forms that may be used separately or in combination: diffusion of up-dated regulations, coaching and training programs, and education programs.

Regulatory agencies can also use information disclosure to consumers or others along the supply chain as a market mechanism to encourage the adoption of compliant practices by food operators. For example, awards and labels can be used as positive market signals. These market signals are also useful in reducing information asymmetry between parties and facilitating customer decision-making when faced with the credence attributes of food products. Depending on consumer awareness, market mechanisms based on information could provide significant incentives to food operators that wish to preserve or build their market shares and reputation.

Sanctions:

We distinguish between three types of sanctions. All are generally used in connection with inspection practices.

Repressive sanctions: Regulatory agencies can use penalties, prosecution, and recalls to punish intransigent food operators for committing an offence or repeatedly breaching regulations. Sanctions for non-compliance may include the closure of facilities, seizure of products, and disqualification from the market.

Informative sanctions: Following a breach in regulations, enforcement agencies may mandate certain corrective actions in order to motivate food operators to comply. There may be a hierarchical spectrum of sanctions depending on the severity of the regulatory offence.

Less severe violations may result in advice, notices, and warnings being given to encourage non-compliant firms to reach compliance through corrective actions. These corrective actions can be imposed by the authorities and/or left to the discretion of food operators.

Sanctions through negative information provided to consumers: Regulatory agencies can display the results of official inspections and findings in order to disclose information about food operators to their customers. These are often referred to as "naming and shaming"

programs. The names of non-diligent companies are posted on the Internet, in newspapers, or at places of business. Another example is obliging food operators to display inspection results

to keep customers informed. This is the purpose of the "scores on doors programs" that the United Kingdom Food Safety Agency has been implementing for food service establishments since 2006.

As noted above, the combination of enforcement practices implemented by a regulatory agency can be used to analyze both the enforcement philosophy and strategy. As

shown in Figure 1, we characterize a traditional enforcement scheme as one that uses inspections and repressive or negative information sanctions as the predominant enforcement practices. This is indicative of a reactive enforcement philosophy and a strict enforcement strategy. We characterize a co-regulation scheme as one that uses information approaches and informative sanctions predominantly. This indicates a proactive enforcement philosophy and a creative enforcement strategy. From a policy perspective, the degree of shift in an enforcement regime towards co-regulation can be evaluated by comparing the suite of enforcement practices used before and after the change. This evaluation using the framework presented in Figure 1 allows an understanding of the actual design versus the rhetorical representation of enforcement regimes and serves as a foundation for assessing the impacts of enforcement changes.

From punishment to prevention in enforcement: A case study of the French import market for fresh produce

We apply the framework through a case study of changes in the enforcement regime in the French import industry for fresh produce that were adopted beginning in 2001. Our purpose is to map and assess changes in the enforcement regime after implementation of this co-regulation scheme. These changes have been characterized as a shift from a traditional to a co-regulation approach. From our perspective, the degree of this shift can be evaluated such as total sales, main product imported, and number of pesticide analyses conducted, as well as about their procurement practices, suppliers, and customers. For firms participating in the co-regulation program our questionnaire also included some qualitative questions about the firm's perception of changes with it.

The co-regulation program in the French import industry for fresh produce

The major parties in the French import industry are the importers, the Board of Importers, and the public authorities. In 2001, importers from the Perpignan import market 3 There are three import markets in France: Perpignan, Rungis, and Marseille. In 2004, France imported 2.7 million tons of produce. The Perpignan market accounts for 50.8% of this volume, followed by Rungis (34.4%) and Marseille (14.8%). The market in Marseille does not have a co-regulation enforcement program in effect.

There is a program in the Rungis market but it is not linked to the one in Perpignan.

negotiated with public authorities to introduce a voluntary safety program carrying out laboratory analyses to monitor the amounts of pesticide residues in fresh produce imported into the European Union. This program proposed by the importers was then negotiated with and approved by the General Service for Consumption, Competition, and the Repression of Fraud (DGCCRF), one of the public authorities in charge of enforcing the law and monitoring food safety in France. The role of the DGCCRF in the program is to evaluate whether the safety process proposed by the firms is effective. Negotiations have been mostly around defining the safety effort that importers would provide and also on the magnitude of the oversight provided by DGCCRF, which is its main function in the program. While the coregulation program was initiated by private agents, the DGCCRF has benefited from its existence through being able to reallocate scarce public resources for monitoring food safety to industries where this kind of scheme does not exist. Moreover, public authorities argue that this private initiative increases the number of controls conducted on imported products, creating more legitimacy for importers in comparison to French producers.

This voluntary safety program fits the definition of co-regulation in enforcement developed in the above sections. Both public and private agents (importers) claim that the first motivation in implementing this program was to achieve better levels of safety for fresh produce entering the French and European market [START_REF] Codron | From public to private safety regulation? The case of negotiated agreements in the French fresh produce import industry[END_REF].

In France and Europe, the safety evaluation for the fresh fruit and vegetables sector relies on Maximum Residue Limits for pesticides (MRLs) set by the European authorities (Regulation (EC) No 396/2005) or French regulation (Decree 04/08/1992, as amended).

According to these laws, residues found in or on produce are judged as being above, at, or below the limit. Thus the safety of fresh produce in France is one-dimensional, as opposed to the United States, for example, where regulation of the safety of fresh produce also refers to the presence of microbiological hazards such as E. coli and Salmonella.

For the importer, the primary way to monitor the safety of fresh produce is to carry out multi-residue laboratory analyses. A single multi-residue analysis costs about €3004 and there are no economies of scale in performing analyses. Under the regulatory system, French importers must comply with a pesticide residue performance standard; they must achieve the prescribed product quality standards and/or safety level. The means to achieve the safety standard are left to their discretion [START_REF] Henson | Food Safety Regulation: An Overview of Contemporary Issues[END_REF]. Under French law, the party or parties in control of pesticide use during the production and post-harvest periods are considered to be producers. Importers are thus producers and face a strict liability rule if they do not comply with the performance standard.

The co-regulation program, called the "Démarche Qualité", agreed upon by the government and importers in the Perpignan market is comprised of two contract agreements.

The first is between the importers and the Board of Importers, while a second links the Board to public authorities. The importers are thus not committed to the public authorities directly but instead are responsible to their Board. The Board is in turn responsible to the public authorities.

For importers, the co-regulation program is a code of conduct for controlling the safety level of supplies. It defines procedures that are based on the principles of the Hazard Analysis Critical Control Points (HACCP) method. The costs involved in joining the program are twofold. First, importers must pay an annual subscription fee of €1,000. Second, they must allocate human and financial resources to monitoring. Importers who join the co-regulation program must arrange an individual laboratory analysis for each €1 million of sales. They also must assign an employee to manage quality control.

Operation of the co-regulation program in the Perpignan market

During the summer of 2006, we conducted a survey of firms that participate in the Perpignan produce import market. Of the 98 firms that were operating in this market, 66 (67%) were members of the co-regulation program, while 32 (33%) were not (see Table 1).

Most of participating firms (61.5%) joined the program when it was introduced in 2001. In 2008, the number of participating firms was the same as in 2005, indicating a stable agreement. Table 1 shows that all of the importers participating in the co-regulation program responded to the survey, while just over one-third (12 of 32) of the non-participating importers responded.

The average turnover5 of the participating firms in 2005 was €16.6 million, with a standard deviation of about 100%. About 50% of the firms are small and medium firms with less than €10 million in sales in 2005; compliance may be an issue for these firms. [START_REF] Fearne | Exploring Alternatives Approaches to Traditional Modes of Regulation of Food Safety[END_REF] establish that co-regulation schemes can be particularly important in helping small and medium sized firms to comply with emerging regulations. The two main products imported by participating firms are tomatoes (for 19.4% of firms) and citrus (e.g., oranges, limes) fruits (for 19.4% of firms). The leading countries of origin for the main products imported in France are Spain (64.5% of volume on average) and Morocco (18%). Citrus fruits and tomatoes have been on specific watch plans set by the DGCCRF and the European Union that include the 10 riskiest fruits and vegetables with regard to pesticide residues. 6Participation in the co-regulation program requires multi-residue testing and the employment of a quality manager. Most of the firms (66%) who participated in the program did not employ a full-time quality manager. One of the employees (most often the forklift operator) is assigned to this function. At the beginning of every year, the quality manager sets out a sampling plan for products that are more likely to show excess pesticide residues based on the types of produce being imported. Table 2 shows that 19.4% of program participants based their sampling plans on the products that public authorities had defined as risky (see footnote 4), 58.1% on the highest volume products, and 22.5% on all products. Our survey suggests that importers who are not part of the co-regulation program do not conduct laboratory analyses. None of the 12 firms that participated in the survey but did not participate in the program conducted laboratory analyses.

Importers in the program conducted an average 24.5 analyses a year in 2004 and 26.8 in 2005. In 2005, 75% of the firms conducted less than 30 analyses. In comparison, only 50% of the participating importers said that they had ordered laboratory analyses to detect levels of pesticide residues before implementation of the program. Their recall of their behavior is consistent with the perception of it expressed in interviews by the public authorities in charge of control. In addition to more residue testing by firms in the co-regulation program, the firms also had to appoint a quality manager and implement a sampling plan. Together these changes constitute a new routine in regard to the safety of supplies.

While the absolute number of analyses gives one indication of firms' involvement in the program, the number of analyses per unit of sales (in million €) provides a measure of the intensity of the safety effort and compliance within the program [START_REF] Rouvière | Heterogeneous Effort in Voluntary Programmes on Food Safety: Theory and Evidence from the French Import Industry of Fresh Produce[END_REF].

Measuring firms' safety effort as the ratio of the number of analyses per €1 million in sales allows us to control for the effect of size on the absolute number of analyses. For example, consider that Firm A is twice as large as Firm B and that they both conduct 10 analyses a year. The absolute effort is the same for both firms whereas the intensity of effort by Firm B is twice as high as for Firm A. Figure 2 shows the distribution of the safety effort by firm size in the sample of participating firms. It shows that effort is decreasing with firm size.

Moreover some firms (15 out of 62) did not comply with the program's requirement of one analysis per €1 million of sales (i.e., safety effort is less than 1). This suggests that the minimum requirement is not strictly enforced by the Board of Importers. At the time of the survey, the public authorities did not consider this behavior as noncompliance by firms. In contrast, the other 47 firms made an effort equal to (1 firm) or above (46 firms) one analysis per €1 million of sales indicating that some firms had incentives to go beyond the minimum requirement.

Importers are required to report to the public authorities the results of analyses that show levels of pesticides above the legal MRLs. Table 3 shows the number of failures reported by importers during 2005. There were no failures for 17 firms (27.4 %), while 23 firms (37.1%) reported only one safety failure and 11 companies (17.7%) reported two. One importer (1.6%) detected 8 failures in 2005. This situation is quite rare but can occur particularly when products are on the top 10 riskiest products list for pesticide residues (see footnote 4).

The central position of the Board of Importers gives it the status of guarantor of the importers' commitment to the program. This is an administrative organisation; the Board members are not involved in the import sector. They are paid by the importers and assume an administrative role representing them. The Board is the "spokesperson" for the importers. It negotiated the agreement with the public authorities on behalf of the importers.

Under the implementation of the co-regulation program, the Board is the dedicated contact for the public authorities. It must ensure controls used by the importers, for example that they follow their sampling plans. The Board gathers information on the number of analyses conducted by the firms participating in the program. However, this is not made publicly available to customers (retailers or wholesalers) or to the public authorities who are not allowed to have any information on an individual importer's safety effort. However, when there is a safety failure, the Board must warn the DGCCRF about the origin of the failure (the name of the company) and communicate the results of the analysis. Every year, the Board submits a report to the French authority, the DGCCRF, which summarizes all the preventive actions importers have implemented during the year. The report provides information such as the total number of analyses done by importers, the number of pesticide analyses conducted on risky products (see footnote 4), and the total costs of the program. In 2008, the Board reported more than 1600 pesticide analyses, which was more than the about 1300 it had expected, with 78% of those analyses being done on risky products. The nonconformity rate was about 4.4%, which is comparable to the nonconformity rate for fresh produce at the national level during inspections conducted by the agents of the DGCCRF. In 2008, the total cost of the co-regulation program supported by importers was €209,805 (before taxes), which represents an average cost of analysis by firms of €3,278.

and only if they have failed to take due care (defined as conducting no analyses). In the event of a safety failure (at the import or retail point), an importer will be considered as having acted in good faith and the public authorities will apply a negligence based rule rather than the strict liability rule that is applied to nonmembers.

Information: Importers are expected to know and comply with the law; ignorance of the law is no excuse. In the co-regulation program, importers benefit from an information scheme providing regular updates on regulations furnished by the regulatory agency. The objective is to keep importers informed concerning regulations in their industry, both at the European and French level. Regulatory information is centralized by the Board of Importers and is then diffused free of charge to participating importers. Moreover, meetings are organized by the Board to discuss the introduction of major developments in regulation that have a significant impact on how business is conducted. For instance, the introduction of the European Food Law (Regulation EEC 178/2002) and mandatory traceability was fully discussed in terms of the consequences for importers. Nonmembers have to keep informed of evolving regulations by their own means.

In addition to regular regulation updates, the agreement provides a mandatory training program for the firms' quality managers. It is organized each year by the regulatory agency.

People in charge of quality must take classes on quality, methods, and risk management in order to implement the agreement's procedures in the most appropriate way. In 2008, 103 people took this training program indicating that on average more than one person is assigned to quality functions in participating firms. Moreover, as an information practice the regulatory agency promotes the agreement by allowing participating firms to use a special logo on their bills of sales. The logo allows firms to differentiate themselves from their rivals and indicates the official support of the authorities for the agreement. Importers can thereby signal that their produce is safer or more closely checked and indicate their commitment to safety to their customers. However, this logo remains a business-to-business signal and cannot be used as a consumer label. 7 In 2005, most of the interviewees said that at that time the program was difficult to promote with customers and they were not getting any price premium for selling more closely monitored products.

Sanctions:

The negligence liability provided by the co-regulation program resulted in sanctions and prosecutions for failures being very rare for participating firms. As reported by them, none of 66 participating firms has been prosecuted following an action by the DGCCRF for safety defects since their involvement in the program. The Board validated this claim that the global number of prosecutions has been drastically reduced to zero since 2001.

From punishment to prevention: Changes in enforcement strategy and philosophy

Our case study of the adoption of the "Démarche Qualité" program for imported produce in the Perpignan market indicates that there was a systematic shift in enforcement practices for participating firms to a co-regulation approach as characterized in Figure 1. Nonparticipating firms remained under the traditional strict enforcement regime. The new approach is characterized by a creative enforcement strategy and a proactive enforcement philosophy that is more oriented toward compliance. For participating companies, the enforcement of safety regulation now focuses more on prevention rather than on punishment and deterrence. The enforcement approach is preventive because it intervenes prior to the occurrence of safety offences (through training and education programs) and provides incentives (the use of a logo, relaxed inspections) to firms that participate in the program. The role of the regulatory agency has shifted toward co-regulation by providing assistance, incentives, and support to food operators for respecting regulations.

In the case studied, the implementation of a more proactive approach in the enforcement of food safety regulations appears to be sustainable for two reasons. On the one hand, the regulatory agency designed and implemented effective incentives. For example, the In this case study, we observe that the whole organization of safety controls in the Perpignan import market has been modified for public and private agents that are part of the co-regulation program. Co-regulation has modified their behavior through more coordinated actions to reach a common goal of better checking produce entering the French and thus the European market. With available data we are unable to assess if the introduction of co-regulation has improved the level of safety of imported produce in France. However, we can make a first step in assessing the impacts of enforcement changes.

Under co-regulation, public agents have become and have to act as educators helping firms to comply with the regulation and providing training. There is less focus on sanctions and more on understanding why firms do not comply with safety standards. The companies have in turn introduced a really new process into their operating environment. Monitoring safety on a regular basis has become a central focus, although levels of safety effort vary considerably. The firms are now aware of the importance on their involvement in doing analyses and of their role as gatekeepers with regard to food safety.

These changes resulted in a modification of the relationships between inspectors and importers that is more balanced. Public and private parties share the same goal of improving the safety of imported produce whereas their individual objectives might differ. The relationship has moved toward a partnership in monitoring the safety of produce. Importers have changed their image of the agency looking more to win-win engagement with it. Both agents contribute to the provision of food safety, which rather than being a sole public policy issue also depends on the management of the private supply chain.

The next step in evaluating co-regulation is to assess its effect on safety. For instance, one means of doing so is to evaluate the evolution since the introduction of the program of the rate of compliance by participating and non participating firms. Another means is to track the safety effort of firms and asses the quality management systems they have implemented. Both approaches would require detailed data at the firm level.

Concluding remarks

  through an analysis of changes in enforcement practices that indicate the actual shift in enforcement strategy and philosophy. The case study is of one of the three main French import markets for fresh produce located in Perpignan in the south of France 3 . It explores how co-regulation has emerged in enforcement in this import market following the issuance of European Regulation (EC) No 178/2002. This regulation imposed greater responsibility on food operators for monitoring and providing food safety. We use data and information from two surveys conducted in 2006. The first survey is qualitative and was conducted with public authorities in charge of food safety controls. The second survey was of importers operating in the Perpignan market. Of the 98 importers surveyed, 66 firms participated in the co-regulation program we analyze. Respondents were asked questions during a face-to-face, one hour interview about the firm's situation in 2005

  use of market mechanisms (such as a logo or label) works as a positive incentive to participate in the program. Buyer-oriented information disclosure indirectly induces food operator compliance with the regulatory requirements. On the other hand, agencies provide technical support, education, and training programs to help firms become compliant. The combination of incentives and prevention constitutes a proactive approach.The new method of enforcing food safety regulation implies the use of new routines by official inspectors to suit the proactive approach. They must become familiar with and use new tools of monitoring (self-reporting). They must also provide technical assistance and supervise education and training programs. The capacity of official inspectors to adapt is an important feature of the introduction of co-regulation in the enforcement regime. The shift from punishment to prevention and facilitation requires a fundamental change in culture on the part of enforcement officials. As[START_REF] Yapp | Factors Affecting Food Safety Compliance Within Small and Medium-Sized Enterprises: Implications For Regulatory And Enforcement Strategies[END_REF] point out, they must learn to act as educators rather than policemen.

Figure

  Figure 1: A Framework for Analyzing Co-regulation in Enforcement Regimes (adapted

Table 1 . Participation of Produce Importing Firms Surveyed in the Perpignan, France Market in Co-Regulation Program, 2006

 1

			All Firms	Surveyed Firms
		#	%	#	% of Group
	Participating Importers	66	67.4%	66	100.0%
	Non Participating Importers	32	32.6%	12	37.5%
	Total	98	100%	78	79.6%

Table 2 . Orientation of Importers' Sampling Plans for Co-Regulation Participants

 2

	Orientation of Sampling Program	# of Firms	% of Firms
	Risky Products	12	19.4%
	Products with Highest Volume	36	58.1%
	All Products	14	22.5%
	Total	62	100.0%

Table 3 . Number of Safety Failures Reported by Participating Firms, 2005

 3

	# of Failures	# of Firms	% of Firms
	0	17	27.4%
	1	23	37.1%
	2	11	17.7%
	3	7	11.3%
	4	1	1.6%
	7	2	3.2%
	8	1	1.6%
	Total	62	100%

Importers who are part of the program benefit from a discount for analysis, with the cost reduced to €160.

Because of missing values, all descriptive statistics are given for a stable sample composed of

firms.

The 10 riskiest products for pesticide residues as identified by the DGCCRF and the European Union are citrus fruits, celery, grapefruit, strawberries, sweet melons, sweet peppers, potatoes, lettuce, tomatoes, and peaches.

Under French law, the safety attributes of fruit and vegetables are difficult to promote to consumers. Firms must be able prove their claims concerning the attributes of a product. In the event of false or unfounded claims, they are liable under crime law[START_REF] Codron | From public to private safety regulation? The case of negotiated agreements in the French fresh produce import industry[END_REF].

Public authorities use this annual report to support their involvement in the program.

They can dismiss the agreement if they assess that importers and their Board do not satisfactorily comply with their individual commitments. In 2009, the public authorities legally renewed the recognition of the program, which suggests that they were satisfied with the outcomes. This action reinforces the considerable changes in enforcement practices, as discussed below, made in negotiating the agreement.

Changes in regulatory agency enforcement practices

We analyze the degree of shift in the regulatory enforcement regime from traditional to in the Perpignan market using the framework presented in Figure 1. The framework begins with an analysis of regulatory practices and then draws conclusions about enforcement strategy and philosophy. The regulatory agency (DGCCRF) normally performs official inspections in order to detect non-compliant firms. Agents mostly conduct regular onsite, product-oriented inspections at the import point or at the retail level. In the case of fresh produce, samples are collected and laboratory analyses are carried out to check that residue levels are within the legal limits. In an official inspection, inspectors randomly select a box of fruit or vegetables (e.g., a box of tomatoes or apples), take one or two pieces of the produce as a sample of the box, and send the samples to the official laboratory, which conducts multiresidue analyses. Once an official laboratory confirms a case of non-compliance, importers are found guilty of an offence. Sanctions are repressive and range from a warning letter to prosecution and fines. At the same time, the whole box of the incriminated produce is taken off the market. The 32 firms in the Perpignan market that do not belong to the voluntary program thus operate under a traditional enforcement regime characterized by a strict enforcement strategy and reactive enforcement philosophy. They face a strict liability rule in a case of safety defect.

The introduction of the co-regulation program changed the entire organization of official safety controls for the importers participating in the program. For these importers, there is a gap between the letter of the law and its enforcement. The changes affected all areas of enforcement practices: inspections, information, and sanctions.

Inspections:

The survey we conducted with importers during the summer of 2006 contained several qualitative questions. For instance, we asked participating firms how they would characterize changes in the regulatory agency's enforcement practices. Of the 62 companies in our sample, 28 (45.2%) said that the number of inspections was lower since they joined the program than when it was not in place. From our qualitative survey with public authorities we found that the routine of the regulatory agency in performing official inspections did change. Official inspections have become second-level controls, with authorities relying on the record-keeping and self-monitoring provided by the importers. Also, under the co-regulation program, importers self-report safety failures, with official inspectors assuming that importers are operating in good faith. Officials interviewed highlighted that as a result of the program they can reallocate resources to monitor riskier food operators. In other words, the reduction of inspections in the co-regulation program allows them to better monitor and inspect the practices of others food operators.

When a failure is detected (at the import point or at the retail level) by the regulatory agency, inspectors come to assess the importers' safety procedures. When the safety procedures are deemed to be correct, the importer is not held liable for the failure. For importers this is the most important commitment of the public authorities in the program: participation in the program allows importers to be found liable (under a strict liability rule) if

We contribute to the current debate on the use of co-regulation in the enforcement of food safety regulations. This co-regulation mainly refers to a shift in regulatory practices in the areas of inspections, information, and sanctions. Co-regulation has increasingly been promoted as a means of transferring more responsibility to food operators. We provide a framework for assessing the degree of movement in regulatory practices, strategy, and philosophy toward co-regulation. We apply this model to assess the degree of movement toward co-regulation with the adoption of the "Démarche Qualité" program for imported produce in the Perpignan market in France. We conclude that in this case enforcement practices moved from a punishment to a prevention mode by providing incentives and information. Further research is needed to evaluate how the modifications under the coregulation program affected the level of food safety in the market.

From a policy perspective, the promise of co-regulation approaches is that they may be more effective than traditional alternatives in reaching compliance goals and desired levels of food safety. In order to do so, co-regulation programs must provide the correct incentives and enough support to reach these goals. Further research should consider the design of programs in terms of incentives for food operators and designs for monitoring by public authorities. Moreover, research must be undertaken to assess the performance of co-regulation schemes in terms of rates and levels of compliance, actual delivered food safety, and costeffectiveness compared to traditional regulatory approaches.


Sven Anders
email: sven.anders@ualberta.ca

Diogo Souza-Monteiro

Elodie Rouviere

Private Third-party Certification in Food Supply 1 of 25 Competition and Credibility of Private Third-party Certification in International Food Supply

Keywords: Third-party certification, market structure, international food marketing, EurepGAP

With globalization a number of international food standards and certification systems emerged in in modern food supply chains. Thirdparty certifiers are critical institutions and play a pivotal role on quality assurance and they provide sound and reliable information on product's quality and safety attributes. Private certification systems can only provide credible market signals if they are objective and independent. This paper investigates the potential implications of increasing certifier's competition on the credibility of private food standards. Our results indicate that increasing economies of scale and certifier market shares are important determinants of third-party certifier competition.

INTRODUCTION

High-quality foods markets have changed dramatically along the past twenty years and moreover with the advent of the new millennium. A plethora of food-safety breakdowns diminished consumers' confidence and trust in the ability of the agro-food industry and governmental authorities to assure the provision of safe and high quality foods. Increasing vertical coordination in food supply chains has triggered a shift in structures from single firm to multi-stakeholder supply-chain configurations [START_REF] Barkema | The many paths of vertical coordination: Structural implications for the US food system[END_REF]. A particularly critical issue of this new paradigm of food supply is the emergence of opportunistic behaviour associated with information asymmetries between contracting parties.

Credible quality signalling is a pivotal element facilitating transactions among agents in the food chain. Reliable product information becomes even more important when firms' differentiation strategies involve credence attributes such as food safety, organic farming or fair trade. Shifts in governmental consumer protection strategies, stricter private food quality and safety standards place greater responsibility on food suppliers, especially retailers, who are becoming "gatekeeper's" and guarantors of food quality and safety. This is certainly the case in the UK where the Food Safety Act of 1990 requires a stricter control of production and processing along the supply chain and forces retailers to assume their share of responsibility on the provision of food safety [START_REF] Henson | Economic Determinants of Food Safety Controls in Supply of Retailer Own-Branded Products in the United Kingdom[END_REF].

Across Europe, retailers are adapting to a new market and regulatory environment, developing and imposing quality assurance systems on their suppliers [START_REF] Fulponi | Private voluntary standards in the food system: The perspective of major food retailers in OECD countries[END_REF][START_REF] Henson | The Role of Public and Private Standards in Regulating International Food Markets[END_REF]. The main motivation for these strategies is the assurance of food safety and quality and liability mitigation [START_REF] Hatanaka | Third-party certification in the global agrifood system[END_REF]. These control systems reassure governmental authorities and consumers' on the quality and safety of products. In recent years several new control and certification bodies have emerged. Thus, new markets have evolved where third-party certifiers (TPC) compete to provide food quality and safety certification services for different private or public food standards, from good farming practices to processor specifications in various standards. This paper focuses on the third-party certification market. Increasing demand for independent private third-party certification of quality assurance schemes creates incentives for market entry of new firms, thus affecting the level of competition among accredited certifiers. Our goal is to investigate the impact of structural change in the TPC market by addressing the issue of market competition as it can affect the accuracy of certification procedures and thus the credibility of private food standards altogether.

Third-party certifiers (TPC) have evolved as independent and credible institutions designed to ensure quality and safety standards across food markets. Third-party certification is one way to assess and to monitor firm's compliance with standards, practices, principles, and/or legal requirements.

Certification can be defined as a voluntary assessment of and approval by an accredited party and an accredited standard [START_REF] Meuwissen | Technical and economic considerations about traceability and certification in livestock production chains[END_REF].

Product and/or process certification may reduce uncertainties and lower overall transaction costs that arise from information asymmetries between producers and retailers in vertical supply chains [START_REF] Caswell | How Quality Management Metasystems Are Affecting the Food Industry[END_REF][START_REF] Tanner | Independent assessment by third-party certification bodies[END_REF][START_REF] Deaton | A theoretical framework for examining the role of thirdparty certifiers[END_REF][START_REF] Manning | Effective management of food safety and quality[END_REF]. [START_REF] Busch | The Relationship of Third-Party Certification (TPC) to Sanitary/Phytosanitary (SPS) Measures and the International Agri-Food Trade: Final Report[END_REF] and [START_REF] Tanner | Independent assessment by third-party certification bodies[END_REF] point out that the credibility of third-party certification critically depends on the objectiveness and independence of the certifier. As market entry alters the competitive structure in the TPC market, there may be a linkage between the accuracy of TPCs and market structure as competition stiffens [START_REF] Lizzeri | Information Revelation and Certification of Intermediaries[END_REF]. If this is the case, the role of TPCs as an efficient signalling institution may be challenged [START_REF] Carriquiry | Optimal Quality Systems for Agricultural Outputs[END_REF][START_REF] Mccluskey | A Game Theoretic Approach to Organic Foods: An Analysis of Asymmetric Information and Policy[END_REF].

The paper is organized as follows: Section two provides an overview of the economics of third-party certification with an emphasis on recent work and its implications on food markets. Section three proposes an analytical framework relating the structure of the TPC market to the objectivity of the certification process. The fourth section presents an empirical case study using panel data on the Euro-Retailer Produce Working Group Good Agricultural Practices (EurepGAP) quality assurance system in the international fruits and vegetables market. Finally, conclusions are drawn.

THE EMERGENCE OF THIRD-PARTY CERTIFIERS AND THEIR

ROLE IN FOOD CHAINS

According to neo-classical economic model, both suppliers and buyers in the market are fully informed about the homogenous commodity that is exchanged. The reality of today's global food markets, however, is characterised by highly diversified products and far reaching information deficits on both side of the market [Jahn, Schramm and Spiller, 2005;[START_REF] Busch | New! Improved? The Transformation of the Global Agrifood System[END_REF]. Empirical studies on food markets suggest that third-party certifiers may mitigate market failure due to information asymmetries between market participants. For instance, [START_REF] Caswell | How Quality Management Metasystems Are Affecting the Food Industry[END_REF] argue that third-party certification may reduce transactions costs where uncertainty about product quality attributes exists. [START_REF] Carriquiry | Optimal Quality Systems for Agricultural Outputs[END_REF] investigate the relation between the stringency of TPCs and optimal quality systems in terms of agricultural output. They find that credible signals in the market place critically depend on the ability of TPCs to establish a positive reputation for its certification service.

While public authorities enforce quality and safety standards through laws and regulations, private agents managing quality assurance schemes punish non-compliance by refusing to issue conformity signals. However, certifiers typically follow some form of economic profit-maximisation rule and the payment of their services is somewhat dependent on quantities of product certified that conforms to the standard. This is an important difference and should not be ignored (Jahn, Schramm and Spiller, 2005).

The analysis of private TPCs has to acknowledge the existence of opportunistic behaviour which may hinder the efficiency and effectiveness of TPC in providing quality signals. [START_REF] Tirole | Hierarchies and Bureaucracies: On the Role of Collusion in Organisations[END_REF] offers important insight into the importance of independence of the third party in transaction processes. His seminal paper uses principal agent theory to model the behaviour of three parties (principal, agent and supervisor) in an organization viewed as a network of intertwined contracts. He shows that, with a dependent third party, coalitions may emerge that prevents a free and efficient flow of information between market partners. Thus, the market structure needs to be considered when analysing TPC markets. Using game theory, [START_REF] Lizzeri | Information Revelation and Certification of Intermediaries[END_REF] studies the impact of market structure on the process of gathering and revealing information. He shows that if the TPC is a monopolist, it will reveal only part of the available information creating a monopoly rent and decreasing social welfare. Contrarily, under a perfectly competitive TPC market, all private information is revealed and social welfare is optimal. [START_REF] Manning | Effective management of food safety and quality[END_REF] stress the importance of certifier accreditation through independent institutions to assess and ensure certifier independence and objectiveness of the certification procedures offered. The authors claim that accredited TPCs offer more guarantees of independence, impartiality, competence and sustainable performance to consumers or other stakeholders. However, accreditation is a largely formal process that does not include the actual monitoring of the certification procedure.

To date, researchers have gained a limited understanding of the quality and thoroughness of control procedures and the determinants that may trigger opportunistic behaviour and/or the creation of market entry barriers.

Jahn, Schramm and Spiller (2005) note that institutions that assure 'controlof-control' mechanisms are imperative to many of today's private agrifood certification systems. A lack of 'control-of-control' may otherwise create environments with strong incentives for incumbent TPCs to prevent market entry of new competitors in a rapidly growing certification market with evolving regulations. In addition, TPCs established in the food sector may find it easier to achieve accreditation for multiple industries realising economies of scale that create added entry barriers for newcomers to the market. [START_REF] Deaton | A theoretical framework for examining the role of thirdparty certifiers[END_REF] analyses the role of TPCs using an information economics framework. Under the assumption of independent TPCs, Deaton shows that certification will only provide effective market signals if low quality producers face higher certification costs than high quality suppliers.

Given the competitive pressure that is common to many retailer-led food supply chains, suppliers may view product or process certification as an externally imposed regulation to protect market shares. Hence, suppliers may express low interest in thorough and costly inspection procedures, giving TPCs reason to reduce certification costs (Jahn, Schramm and Spiller

2005).

As many food sectors are shifting from price-to quality-based competition, TPCs are becoming increasingly important and powerful players in discriminating between higher and lower quality food producers [START_REF] Henson | Private agri-food standards: Implications for food policy and the agri-food system[END_REF]. Eventually, this trend will likely create larger and more powerful TPCs whose self-interest in profit-maximization, could in turn, affect the functioning of the certification market itself. This justifies a closer scrutiny of both the structure of the TPC markets and its role as a credible quality assurance institution. A critical question is whether the increasing competitive pressure in the certification market will affect the outcome and hence the reliability of the certification process?

ANALYTICAL FRAMEWORK

The theoretical economic literature investigates the role of market intermediaries, auditors and certifiers in different contexts and markets. This paper proposes a framework to discuss how the evolving market structure of food standard certification may affect the provision of credible market signals. Jahn, Schramm and Spiller (2005), analyse the reliability of certification focusing on the relationship between a standard owner and certifying bodies. In turn, we focus on the relationship among TPCs to gain insight into the question of how inter-TPC competition might influence the quality of the certification process.

Previous work has analysed the role of intermediaries as agents disclosing otherwise private information and at the impact of market structure on its effectiveness. Our framework illustrates the structure of private, business-to-business certification, such as the EurepGAP food standard or those emerging from the ISO 9000 standard family. Assuming a private standard system Figure 1 illustrates the institutional structure of a third-party certification system where the standard owner establishes an accreditation system to guarantee and streamline the flow of quality information through certification from producers upstream to the retail market downstream.

Assuming a retail-owned standard, standard requirements are likely to be imposed on all suppliers. Thus, a producer or processor, aiming to enter a contractual relationship, must clearly demonstrate standard compliance which usually requires supplier certification by a third party. A certificate is issued by the TPC based on established rules laid down and reviewed by the standard owner. TPCs in turn have to prove their eligibility to conduct inspections through ISO 65/EN 45011 standard accreditation. Eventually, it is the standard owner's responsibility to oversee the development, monitoring and ultimate control of applicable procedures. Changes in the competitive structure of the certification market may then have significant implications for both certifiers and associated suppliers. [START_REF] Carriquiry | Optimal Quality Systems for Agricultural Outputs[END_REF] argue that a credible certification scheme is one where high quality products have higher chances of being certified than low quality products. Accurate and independent third-party certification should not only be able to minimize both type I and II certification errors, but also resist any pressure to relax its procedures.

Assuming that accuracy levels increase with firm size and reputation, multinational certifiers may have a competitive advantage in terms of cost and reputation over small and local TPCs. Reputation itself is a function of a TPC's market experience. Tightening competition may either increase the level of accuracy or reduce it and so affect the amount and reliability of information becoming available [START_REF] Lizzeri | Information Revelation and Certification of Intermediaries[END_REF]. Increasing competition may prevent reputable firms from relaxing monitoring accuracy, especially if 'control-of-control' mechanisms are effective (Jahn, Schramm and Spiller, 2005). Otherwise, greater competition for certification services contracts may offer incentives to relax grades of accuracy to assure larger market shares. In such case, products that would otherwise fail to comply with a quality standard may pass certification. This, in the long run, would artificially increase compliance rates resulting in overall decreasing product quality, thereby endangering the credibility of third-party certification systems in the food sector. Revolving cases of low quality products, falsely entering the market place regardless of quality assurance systems in place (spoiled meat in Germany), prove the actuality of this argument (Deutsche [START_REF] Welle | Germany to Tighten Controls on Spoiled Meat[END_REF].

While each TPCs must demonstrate their independence and accuracy of procedures to obtain accreditation, once this threshold is surpassed, TPC start competing for firms seeking certification services. Insofar as there are a limited number of firms seeking certification for their products or processes and TPC may not need to demonstrate their independence status, stringency could decrease.

DATA, EMPIRICAL MODEL and RESULTS

To

Empirical Model

A nested panel-model approach is used to analyse the impact of changing market structure in EurepGAP's certification of fruits and vegetables on the level of inter-TPC competition in a cross-section of over 100 accredited certifiers in 28 countries in the year 2006. The number of competing EurepGAP TPCs involved in the certification of fruits and vegetables in country i is regressed on a number of structural and market specific parameters that are assumed to have an impact on inter-TPC competition.

+ + + + + + = ) ( ) ( ) ( ) _ ( ) _ ( ) _ ( ) _ ( ) ( ) _ _ ( _ 9 8 7 6 5 4 3 2 1 0
Comp_Cert is the dependant variable and denotes the number of accredited EurepGAP TPCs j that compete for certification contracts in the fruit and vegetable sector in country i. The errors ε it are assumed to be normally distributed with mean zero. Time_of_Entry represents the month and year of entry of a TPC into the EurepGAP system. As an increasing number of TPCs around the world apply for EurepGAP accreditation, we hypothesize that a later market entry entails higher competitive pressure as the number of incumbent certifiers increases. Activity is a proxy of a TPC's economies of scale denoting the number of countries in which the company certifies fruits and vegetables for EurepGAP. As can be seen from Table 1 the average TPC certifies produce in around 13 countries. However, the standard deviation indicates a large bandwidth. From the dataset, we can identify TPC's active in only a single country and global playerslike SGSthat certify produce for EurepGAP in over 35 countries. It is assumed that large-scale TPC's have a competitive advantage over smaller "national" certifiers due to differences in certification costs and reputation assets. In addition, multinational companies that are diversified across many markets will be less affected by increased competitive pressure in a single market. We hypothesize a negative impact of Activity on the level of competition.

Share_Veggie and Share_Fruit describe TPC j's share in country i's market for certified fruits and vegetables, respectively. With increasing market shares individual certifiers are assumed to face lower competitive and cost pressure, as the underlying market structure deviates toward more oligopolistic structures and finally a monopoly where a single TPC accounts for all certified product.

Exp_Agri and Exp_Food are proxies for the export orientation of country i with respect to the value of its overall exports of agricultural and processed foods, relative to the total size of its fruit and vegetable sector.

We assume that an increasing share in international fruit and vegetable market positively affects country i's involvement in the EurepGAP standard. Hence, we hypothesize positive signs for these variables.

TPC's like SGS are among the global market leaders in the certification and quality assurance for food stuffs. The variable SGS equals one for countries in which this TPC conducts EurepGAP standard certification and is zero for all other countries. The presence of SGS in country i is assumed to hinder market entry of smaller TPCs and therefore results in less competition in these markets. We expect a negative coefficient.

Americas and Europe are dummy variables depicting the geographical regions South America and Europe. The data identifies South America and Europethe origin of EurepGAPas areas of major certification activity.

We hypothesize that these regions show higher levels of competition among EurepGAP certification contracts.

Empirical Results

Our results show a relative competitive advantage of larger and more diversified TPCs. As indicated by the variables Activity and Share_Fruit increasing market diversification, in terms of the number of countries TPC j certifies product in, greater market shares result in less competitive pressure from competitors. While this result is significant for EurepGAP's fruit standard, the coefficient for Share_Veggie is not significant.

The variable Year_of_Entry provides valuable insight into the relation between market entry and the level of competition. EurepGAP's recognition and importance as a global quality assurance system in food trade has rapidly increased since its inauguration in 1997. The positive sign indicates that over time, rising numbers of accredited EurepGAP certifiers have significantly raised the level of competition among certification bodies and across countries.

The internationalization of trade in foods and agricultural products in recent years has been a driving factor of increased importance of international standardization and certification systems as is EurepGAP.

Increasing information asymmetries and uncertainty about product quality and food safety in today's global food trade makes a reliable certification of food products vital. This is particularly important for many developing countries that strive to gain better market access to Europe's and North America's high-value markets. Our model results reveal that rising levels of export orientation in processed foods, relative to the amount of fruit and vegetable production in a country, positively affects the number of competing TPCs in these sectors. Interestingly, the exact opposite seems to be the case with respect to a country's degree of commodity export orientation. Larger shares of commodity exports have a significant negative effect on a country's penetration by food quality standards such as EurepGAP.

The variable SGS, as hypothesized earlier, assumes a negative effect of incumbent reputation and economies of scale on the competitiveness of new TPCs in the EurepGAP system. However, we can not infer much more than the direction of change as the coefficient for SGS is insignificant.

Finally, our results provide insight into differences in inter-TPC competition in different geographical markets. Our data reveals that EurepGAP plays a major role in the fruit and vegetable sectors of many South American countries. Another focus of EurepGAP, of course, is Europe. Against the hypothesized effect, both variables show negative coefficients. TPCs operating in South American countries face significantly less competitive pressure from rival TPCs compared to other world regions involved in fruit and vegetable trade. The same effect seems to hold for Europe, but remains insignificant.

CONCLUDING REMARKS

Third-party certifiers are playing an increasing role in international quality food markets as consumers increasingly demand clear and credible signals with regards to the quality and safety of foods. Global food procurement and trade entail increasing uncertainty and information asymmetries. As competition in many food markets is shifting from a firm to a multi stakeholder supply-chain configuration, a considerable number of private TPCs have emerged to provide product and process certification of quality attributes used in product differentiation in today's globalized food system.

Previous research has addressed the importance of TPCs as a private institution that facilitates the reduction of uncertainties related to information asymmetries in credence food quality and safety attributes. One of the main arguments raised in the literature is that to properly fulfil their role, TPCs must remain independent and stringent [START_REF] Tanner | Independent assessment by third-party certification bodies[END_REF][START_REF] Deaton | A theoretical framework for examining the role of thirdparty certifiers[END_REF][START_REF] Busch | The Relationship of Third-Party Certification (TPC) to Sanitary/Phytosanitary (SPS) Measures and the International Agri-Food Trade: Final Report[END_REF]. This paper maintains that the accuracy of private TPCs might be affected by the level of competition among rival certification providers. Namely that, with increasing numbers of competitors in a market, the level of quality and safety assurance provided under a certain standard might be much reduced.

Based on panel data of EurepGAP's global standard for the certification of fruits and vegetables, our analysis provides empirical evidence and valuable insight into the competitive structures among the rapidly increasing number of EurepGAP accredited certifiers. Moreover, our results are intended to stimulate the ongoing discussion on the role of private thirdparty certification of agricultural and processed food products as an important means to assure the quality and safety of consumer foods.

FIGURE

  FIGURE 1. Schematic Structure and Competitive Relationships of the Certification Market

Table 1

 1

	Comp	Cert	j it	a		a		Time	of	it Entry	a	it Activity	a	SHARE	it VEGGIE
		a	SHARE	FRUITS	it	a	EXP		AGRI	it	a	EXP	FOOD	it	+	a	SGS
	+	a	AMERICAS	+	a		EUROPE	+	e	it

presents definitions and descriptive statistics of the dependent and independent variables. The following nested panel model is specified:

TABLE 1 . Definitions of Variables and Sample Statistics Table

 1

	Variables	Variable Description	Mean	Standard Deviation
	Dependent Variable
	Comp_Cert		8.58	5.87
	Variables
	Time_of_Entry	Month and year of EurepGAP accreditation	8.27	4.67
	Timelag	Time gap between a TPC's application and EurepGAP approval	2003.64 1.57
	Activity	Number of countries i in which TPC j certifies product	12.87	11.53
	Share_Veggie	TPC j's share in the market for certified vegetables in country i (tons)	821.15	3230.50
	Share_Fruits	TPC j's share in the market for certified fruits in country i (tons)	0.24	0.27
	Exp_Agri	Country i's value of agr. exports per ton of vegetable and fruit produced in 2006	15694	16960.18
	Exp_Food	Country i's value of food exports per ton of vegetable and fruit produced in 2006	13645	14559.73
	SGS	Presence of global TPC player SGS in country i	0.73	0.44
	Americas	Geographical dummy variable North and South American countries	0.13	0.33
	Europe	Geographical dummy variable European countries	0.72	0.44

Table 2

 2

	presents the panel model estimates. Among several model
	specifications Exact-Maximum Likelihood Estimators (ExactML), corrected
	for first-order serial autocorrelation revealed the best results based on the
	Schwarz-Bayesian Information Criterion (SBIC). Statistically insignificant
	F-tests could not reject the null hypothesis of ExactML over a fixed-effects
	model specification at the 95-percent level. The nested panel model
	estimates are generally well behaved.

TABLE 2 . Explaining Inter-TPC Competition in the International EurepGAP System for Fruits and Vegetables a Variables Estimates b

 2

		0.006***
	Year of Entry	(0.00)
		8.43
		-0.208***
	Activity	(0.03)
		-5.99
		0.0001
	Market Share Vegetables	(0.00)
		-0.97
		-0.003***
	Market Share Fruit	(0.00)
		-2.86
		-0.093***
	Export Orientation Agricultural Products	(0.03)
		-3.60
		0.094***
	Export Orientation Foods	(0.02)
		3.62
		0.724
	Presence of SGS	(1.03)
		0.70
		-4.057***
	South America	(1.54)
		-2.62
		-0.801
	Europe	(1.39)
		-0.57
	Rho	0.12
	Test Statistics:	LogL:-864.05
		DW: 1.34
		R2: 0.496
	a Dependent variable: Number of competing TPC's in country i. b ExactML random effect estimates of elasticities corrected for serial correlation. t-
	statistics and standard errors (in parentheses) computed with White's
	heteroscedasticity-consistent standard errors. *** , ** and * statistically significant at the 99%-, 95%-and 90%-level, respectively.
	Soure: Author's own computation.

Finally, this study emphasises the need for more detailed data to facilitate research on the differences between certified product and residual commodity market segments. Such information is vital to the better understanding of the implications of private food standards, such as EurepGAP, the British Retail Consortium (BRC) or Safe Quality Food (SQF), have on the performance of today' international food supply chains.