Advanced Search
MyIDEAS: Login to save this paper or follow this series

Mandatory labels, taxes and market forces: An empirical evaluation of fat policies

Contents:

Author Info

  • Olivier Allais

    ()
    (ALISS - Alimentation et sciences sociales - Institut national de la recherche agronomique (INRA) : UR1303)

  • Fabrice Etilé

    (ALISS - Alimentation et sciences sociales - Institut national de la recherche agronomique (INRA) : UR1303, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA))

  • Sébastien Lecocq

    (ALISS - Alimentation et sciences sociales - Institut national de la recherche agronomique (INRA) : UR1303)

Abstract

The public-health community views the mandatory labelling and taxation of fat as promising tools to control the growth of food-related chronic disease. This paper is the first to propose an ex ante evaluation of these two policy options in an oligopolistic setting with differentiated products and heterogeneous demand. Using household scanner data on fromages blancs and dessert yogurts, we separately identify consumer preferences for fat and front-of-pack fat labels by exploiting an exogenous difference in legal labelling requirements between these two product categories. Demand estimates are then combined with a supply model to evaluate both policies. In the absence of any producer price response, making fat labels mandatory reduces the fat supplied to regular consumers in this market by 38%; an ad-valorem tax of 10% (5%) on the producer price of full-fat (half-skimmed) products has a similar impact. Allowing producer price reactions, however, yields much smaller effects: a 9% drop for the fat tax, and a fall of only 1:5% for mandatory labels. Producers thus neutralise up to 96% of the impact of mandatory labelling on demand, via large price cuts on products with large ex ante margins. This illustrates how market forces are largely able to defeat the intended effect of market-based public-health interventions.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://halshs.archives-ouvertes.fr/docs/00/73/65/56/PDF/wp201237.pdf
Download Restriction: no

Bibliographic Info

Paper provided by HAL in its series PSE Working Papers with number halshs-00736556.

as in new window
Length:
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:hal:psewpa:halshs-00736556

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00736556
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/

Related research

Keywords: Nutrition ; Labelling ; Price fat ; Informatic;

Other versions of this item:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Harvey S. Rosen & Kenneth A. Small, 1979. "Applied Welfare Economics with Discrete Choice Models," NBER Working Papers 0319, National Bureau of Economic Research, Inc.
  2. Celine, Bonnet & Dubois, Pierre & Villas-Boas, Sofia B., 2009. "Empirical Evidence on the Role of Non Linear Wholesale Pricing and Vertical Restraints on Cost Pass-Through," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5nq6h34n, Department of Agricultural & Resource Economics, UC Berkeley.
  3. Murphy, Kevin M & Topel, Robert H, 2002. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 88-97, January.
  4. Olivier Allais & Patrice Bertail & Véronique Nichèle, 2010. "The Effects of a Fat Tax on French Households' Purchases: A Nutritional Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 228-245.
  5. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
  6. Bonnet, Céline & Dubois, Pierre, 2008. "Inference on Vertical Contracts between Manufacturers and Retailers Allowing for Non Linear Pricing and Resale Price Maintenance," CEPR Discussion Papers 6918, C.E.P.R. Discussion Papers.
  7. Steven T. Berry & Philip A. Haile, 2009. "Nonparametric Identification of Multinomial Choice Demand Models with Heterogeneous Consumers," Cowles Foundation Discussion Papers 1718, Cowles Foundation for Research in Economics, Yale University, revised Mar 2010.
  8. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
  9. Aviv Nevo, 1998. "Measuring Market Power in the Ready-to-Eat Cereal Industry," NBER Working Papers 6387, National Bureau of Economic Research, Inc.
  10. Steven T. Berry & Philip Haile, 2010. "Identification in Differentiated Products Markets Using Market Level Data," Cowles Foundation Discussion Papers 1744, Cowles Foundation for Research in Economics, Yale University, revised Mar 2010.
  11. Jayachandran N. Variyam, 2008. "Do nutrition labels improve dietary outcomes?," Health Economics, John Wiley & Sons, Ltd., vol. 17(6), pages 695-708.
  12. J. Miguel Villas-Boas & Russell S. Winer, 1999. "Endogeneity in Brand Choice Models," Management Science, INFORMS, vol. 45(10), pages 1324-1338, October.
  13. Mario F. Teisl & Nancy E. Bockstael & Alan Levy, 2001. "Measuring the Welfare Effects of Nutrition Information," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 133-149.
  14. George S Olley & Ariel Pakes, 1992. "The Dynamics Of Productivity In The Telecommunications Equipment Industry," Working Papers 92-2, Center for Economic Studies, U.S. Census Bureau.
  15. Joshua P. Berning & Hayley H. Chouinard & Jill J. McCluskey, 2010. "Do Positive Nutrition Shelf Labels Affect Consumer Behavior? Findings from a Field Experiment with Scanner Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(2), pages 364-369.
  16. Mathios, Alan D, 2000. "The Impact of Mandatory Disclosure Laws on Product Choices: An Analysis of the Salad Dressing Market," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 651-77, October.
  17. Pauline M. Ippolito & Alan D. Mathios, 1990. "Information, Advertising and Health Choices: A Study of the Cereal Market," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 459-480, Autumn.
  18. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  19. Jeremy T. Fox & Kyoo il Kim & Stephen P. Ryan & Patrick Bajari, 2011. "A simple estimator for the distribution of random coefficients," Quantitative Economics, Econometric Society, vol. 2(3), pages 381-418, November.
  20. Bonnet, Céline & Réquillart, Vincent, 2011. "Strategic Pricing and Health Price Policies," IDEI Working Papers 671, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jul 2012.
  21. Chouinard Hayley H & Davis David E & LaFrance Jeffrey T & Perloff Jeffrey M, 2007. "Fat Taxes: Big Money for Small Change," Forum for Health Economics & Policy, De Gruyter, vol. 10(2), pages 1-30, June.
  22. Fox, Jeremy T. & Kim, Kyoo il & Ryan, Stephen P. & Bajari, Patrick, 2012. "The random coefficients logit model is identified," Journal of Econometrics, Elsevier, vol. 166(2), pages 204-212.
  23. Andrew Caplin & John Leahy, 2001. "Psychological Expected Utility Theory And Anticipatory Feelings," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 55-79, February.
  24. Chiou, Lesley & Walker, Joan L., 2007. "Masking identification of discrete choice models under simulation methods," Journal of Econometrics, Elsevier, vol. 141(2), pages 683-703, December.
  25. Wansink, Brian & Sonka, Steven T. & Hasler, Clare M., 2004. "Front-label health claims: when less is more," Food Policy, Elsevier, vol. 29(6), pages 659-667, December.
  26. Sébastien Lecocq & Jean-Marc Robin, 2006. "Estimating Demand Response with Panel Data," Empirical Economics, Springer, vol. 31(4), pages 1043-1060, November.
  27. Ran Kivetz & Anat Keinan, 2006. "Repenting Hyperopia: An Analysis of Self-Control Regrets," Journal of Consumer Research, University of Chicago Press, vol. 33(2), pages 273-282, 07.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:hal:psewpa:halshs-00736556. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.