The economics of animal welfare — why the free market underproduces welfare, and how policy intervention corrects for market failure.
The economics of animal welfare explain why consumer choice alone cannot solve farm animal welfare problems. Markets systematically underprovide welfare because producers who invest in welfare bear costs that competitors who do not invest avoid, creating competitive pressure to minimize welfare. This is a market failure with known solutions: minimum welfare standards that apply to all producers, information provision through credible certification, and corrective taxation or subsidies that internalize the externalities of poor welfare. The policy case for welfare regulation is not merely ethical but economic — it corrects a documented market failure. Animal welfare advocates who understand and use economic arguments alongside ethical ones are more likely to achieve durable regulatory change.