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

Title
Quality standards versus nutritional taxes: Health welfare impacts with strategic firms
Paper authors
Vincent Réquillart, Louis Georges Soler, Yu Zang
Date
May 27 2016
Description 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.
Category
Working papers
URL
Corresponding Author(s)
Vincent Réquillart
Authors at SUSFANS
Work package
JEL Code
I18, L13, Q18
Keywords
taxation, MQS, product di erentiation, strategic pricing, nutritional policy