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Quality standards versus nutritional taxes: Health and welfare impacts with strategic firms

Listed author(s):
  • Réquillart, Vincent
  • Soler, Louis-Georges
  • Zang, Yu

The goal of this paper is to better understand firms' strategic reactions to nutritional policies targeting food quality improvements and to derive optimal policies. We propose a model of product differentiation, taking into account the taste and health characteristics of products. We study how two firms react to alternative policies: an MQS policy, linear taxation of the two goods on the market, and taxation of the lowquality good. The MQS and the taxation of the low-quality product are the preferred options by a social planner. If taste is moderately important, the MQS policy is chosen by a populist and a paternalist social planner. If taste is a major component of choice, the populist planner chooses to tax the low-quality product whereas the paternalist planner prefers the MQS policy. Finally, for a paternalist social planner, an MQS-based policy always allows for higher levels of welfare than an information policy alone.

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File URL: https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/wp/2016/quality.pdf
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Paper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 15-594.

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Date of creation: 03 Sep 2015
Date of revision: Sep 2016
Publication status: Published in Journal of Health Economics, vol. 50, décembre 2016, p. 268-285.
Handle: RePEc:tse:wpaper:29587
Contact details of provider: Phone: (+33) 5 61 12 86 23
Web page: http://www.tse-fr.eu/

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