Tuesday, November 17, 2009

Oyster Strategy

Also on Morning Edition today was a story about the FDA protecting us from contracting Vibrio from eating raw oysters. Two snippets caught my attention.

First, it appears that the FDA will put this on hold to study the costs and benefits. Just what should the threshold costs be to the industry to justify not saving 30 people from getting sick and half dieing? Were these costs not studied over the last decade since "the public health debate over Vibrio was getting national attention in the mid-1990s?"

Second, Mike Voisin of Motivatit Seafood, a firm already protecting us from bad oysters, wants to FDA to back off. The usual "Raising Rival's Costs" theory is that early adopters want to impose the adoption costs on other firms by making the government mandate the adoption. He is clearly doing the opposite. Another possibility is that his firm derives market power from the product differentiation from "dirty" oysters and does not want the competition from more firms with closer substitutes. A third possibility is that this is what he truly believes and is advocating against his firm's own interest. We may not expect such an public exercise in moral hazard from the hired help, but since Mr. Voisin is also the owner, it may be plausible.

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