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

Vincent Réquillart, Louis-Georges Soler and Yu Zang

No 15-594, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: 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.

Keywords: Taxation; MQS; Product differentiation; Strategic pricing; Nutritional policy (search for similar items in EconPapers)
JEL-codes: I18 L13 Q18 (search for similar items in EconPapers)
Date: 2015-09, Revised 2016-09
New Economics Papers: this item is included in nep-agr, nep-int, nep-mkt and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: Quality standards versus nutritional taxes: Health and welfare impacts with strategic firms (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:29587

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