Economics can explain why markets systematically undervalue animal welfare, and understanding these market failures helps identify where policy intervention can most effectively improve welfare outcomes.
Market failures systematically undervalue animal welfare, explaining why voluntary corporate action alone cannot solve farm animal welfare problems. Animals cannot participate in markets or advocate for themselves. Consumers who care about welfare cannot identify high-welfare products without labelling. The costs of improved welfare are internalised by producers while benefits to animals and society are dispersed. This creates competitive pressure against welfare improvement in the absence of regulation. Mandatory welfare labelling, minimum welfare standards enforced across industries, and public procurement requirements that embed welfare criteria can correct these market failures more effectively than consumer choice alone.