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.
Taxation; MQS; Product differentiation; Strategic pricing; Nutritional policy;
- I18: Government Policy • Regulation • Public Health
- L13: Oligopoly and Other Imperfect Markets
- Q18: Agricultural Policy • Food Policy
Vincent Réquillart, Louis-Georges Soler, and Yu Zang, “Quality standards versus nutritional taxes: Health and welfare impacts with strategic firms”, TSE Working Paper, n. 15-594, September 3, 2015, revised September 2016.
Vincent Réquillart, Louis-Georges Soler, and Yu Zang, “Quality standards versus nutritional taxes: Health and welfare impacts with strategic firms”, Journal of Health Economics, vol. 50, December 2016, pp. 268–285.
Journal of Health Economics, vol. 50, December 2016, pp. 268–285