Quality standards versus nutritional taxes: Health and welfare impacts with strategic firms.
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 low-quality 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.
Toulouse School of Economics, INRA, University of Toulouse Capitole, 21 Allée de Brienne, 31000 Toulouse, France. Electronic address: vincent.requillart@tse-fr.eu.
Vincent
V
Réquillart
INRA-ALISS, UR 1303, 65 Boulevard de Brandebourg, 94205 Ivry-sur-Seine, France.
Louis-Georges
LG
Soler
Toulouse School of Economics, University of Toulouse Capitole, 21 Allée de Brienne, 31000 Toulouse, France.
Yu
Y
Zang
D005502:Food / Q000191:economics*; D006801:Humans; D009753:Nutritive Value; D012946:Social Welfare; D013660:Taxes
MQS; Nutritional policy; Product differentiation; Strategic pricing; Taxation