Demand Substitution Between Meat and Plant-Based Meat Alternatives Under Meat Taxes and Price Incentives: Evidence from U.S. Households

Srijan Budhathoki and Jill McCluskey

No 404569, 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri from Agricultural and Applied Economics Association

Abstract: Plant-based meat alternatives (PBMAs) have been marketed as a tool for reducing the environmental footprint of food consumption, yet their actual market performance and policy relevance remain contested. Using the Nielsen Consumer Panel, we estimate an EASI demand system across conventional beef, conventional chicken, plant-based (PB) beef, PB chicken, and PBMA veggie products for the years 2021 to 2024, a period that follows the PBMA U.S. sales peak. Censored participation is corrected via the Shonkwiler-Yen two-step procedure with full categorical demographic controls in the selection stage. PBMA participation rates declined markedly across our sample period, yet PBMAs retain persistent price premiums over their conventional counterparts. We find that PBMAs are own-price elasticities are elastic, while conventional meats are approximately unit elastic. Hicksian cross-price elasticities reveal meaningful substitutability between PB beef and conventional beef and between PB chicken and conventional chicken, but Marshallian cross-price elasticity estimates are negative, reflecting dominant income effects. Policy simulations suggest that a carbon tax calibrated to the U.S. social cost of carbon would reduce household beef consumption by 8% to 20% and aggregate dietary greenhouse gas emissions by 6.5% to 16.2%, whereas a $0.10 per pound PBMA subsidy alone generates negligible emissions reductions. Combining the carbon tax with a PBMA subsidy yields marginally greater reductions. Heavy meat consumers and low-income households face disproportionately large absolute reductions in consumption under the carbon tax. Our results imply that demand-side climate policy in the food sector should prioritize consumption taxes on high-emission conventional meats over supply-side subsidies for alternatives.

Keywords: Food; Consumption/Nutrition/Food; Safety (search for similar items in EconPapers)
Pages: 34
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea26:404569

DOI: 10.22004/ag.econ.404569

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