An economic analysis of private incentives to adopt DNA barcoding technology for fish species authentication in Canada

Abstract

The increasing spate of species substitution and mislabelling in fish markets has become a concern to the public and a challenge to both the food industry and regulators. Species substitution and mislabelling within fish supply chains occurs because of price incentives to misrepresent products for economic gain. Emerging authenticity technologies, such as the DNA barcoding technology that has been used to identify plants and animal (particularly fish) species through DNA sequencing, offer a potential technological solution to this information problem. However, the adoption of these authenticity technologies depends also on economic factors. The present study uses economic welfare analysis to examine the effects of species substitution and mislabelling in fish markets, and examines the feasibility of the technology for a typical retail store in Canada. It is assumed that increased accuracy of the technology in detecting fraud and enforcement of legal penalties and other associated costs would be likely to discourage cheating. Empirical results suggest that DNA barcoding technology would be feasible presently for a typical retail store only if authentication is done in a third party laboratory, as it may not be feasible on an individual retail store level once fixed and other associated costs of the technology are considered.