Article

Market Competition and the Health Composition of Manufactured Food

Stephen F. Hamilton, and Vincent Réquillart

Abstract

There has been surprisingly little research to date on the supply-side role of food manufacturers on equilibrium health outcomes for consumers. In this letter we consider an oligopoly model in which food processors choose the health composition of manufactured food. We show that price competition between food processors leads to unhealthy food composition in the market equilibrium, even under circumstances in which consumers know food composition is unhealthy. Taxes on manufactured food decrease the healthiness of manufactured foods whenever improved consumer health increases the price elasticity of food demand.

Keywords

food design; consumer health; manufactured food; nutritional policies;

JEL codes

  • I18: Government Policy • Regulation • Public Health
  • L13: Oligopoly and Other Imperfect Markets
  • Q18: Agricultural Policy • Food Policy

Reference

Stephen F. Hamilton, and Vincent Réquillart, Market Competition and the Health Composition of Manufactured Food, Health Economics, vol. 26, n. 12, December 2017, pp. 1637–1643.

See also

Published in

Health Economics, vol. 26, n. 12, December 2017, pp. 1637–1643