Friend or PHO? On the Marginal Valuation of Reducing the Content of Trans Fat in Processed Foods
Advances in Management and Applied Economics, 2017, vol. 7, issue 2, 2
Ahead of the January 1, 2006 deadline for mandatory labeling of trans fat,Â Nabisco, a leading brand in the market for crackers â€“ a $1 billion processed foodÂ category and ranked amongst the top sources of trans fat â€“ reformulated a subsetÂ of their existing products and voluntarily labeled them as trans fat-free. NewÂ products were also introduced in the market and labeled as trans fat-free as well.Â The purpose of this study was to determine the implicit price of productsÂ voluntarily labeled as trans fat-free. Using a national level weekly scanner data setÂ and controlling for the other observable product attributes, such as non-PHO fatÂ labels, whole grain labels, sodium labels, variety, and package size, in addition toÂ market conditions, the implicit price of the voluntary trans fat-free label wasÂ estimated to be $0.53 per pound, or a premium over the base case of 17.64Â percent.JEL classification numbers: D12, M38, Q18Keywords: Food Labeling Policy, Hedonic Pricing, Retail Scanner Data, TransÂ Fat.
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