Simulating welfare effects of the European nutrition and health claims' regulation: the Italian yogurt market

Bonanno, Alessandro; Huang, Rui; Liu, Yizao

doi:10.1093/erae/jbu033

Cited by 16 publications

(16 citation statements)

References 41 publications

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“…Our framework combines an oligopolistic supply side with a discrete choice demand model, following other analyses in the industrial organisation literature (Berry et al 1995; Nevo 2001; Petrin 2002; Bonanno et al 2015). The supply side considers firms as oligopolists following a two‐stage decision process, deciding whether to commit labelling fraud first and then competing on prices, playing a Bertrand game.…”

Section: An Empirical Economic Model Of Labelling Fraudmentioning

confidence: 99%

“…The demand side models the aggregation of consumers' discrete choices where each product's market share represents the probability that a product is chosen. Following the work of Bonanno et al (2015), who simulated welfare changes in the presence of false health claims, we use the estimated demand coefficients and the calculated Nash ‐ Bertrand short‐run profits to determine the amount of consumers' welfare losses incurred by overpayment for a false label and the resulting producer surplus. We then compare the counterfactual producer surplus to simulated gains from fraud, calculated using input price differential data, to present a range of the estimated extent of welfare losses due to fraud.…”

Section: An Empirical Economic Model Of Labelling Fraudmentioning

confidence: 99%

“…In this section, we employ the Bonanno et al () approach to simulating welfare losses for consumers in presence of labelling fraud, as well as a fraudulent producer's welfare gains. Let consumers' valuation of a given attribute L , potentially subject to labelling fraud, be β L .…”

Section: An Empirical Economic Model Of Labelling Fraudmentioning

confidence: 99%

“…Additionally, although sales losses resulting from products being seized by the authorities are included in the calculation of the threshold fraud probability, we did not calculate the new equilibrium prices and quantities resulting from a market with fewer products. These two scenarios are similar to the de‐labelling and product withdrawal scenarios considered in Bonanno et al (2015) and could be easily included in future assessments of the economic effects of fraud.…”

Section: Concluding Remarks Model Extensions and Limitationsmentioning

confidence: 99%

“…Our model adapts the framework developed by Bonanno et al (2015) to measure welfare changes in the presence of untruthful health claims in a differentiated product market, to assess the effects of labelling fraud. We model the demand side of the market in ‘attribute space', using a random coefficient logit model (Nevo 2000, 2001) to obtain estimates of the taste parameter for the attribute subject to fraud, and recover the supply side assuming manufacturers play a multi‐product Nash‐Bertrand game (Nevo 1998, 2000).…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

An empirical framework to study food labelling fraud: an application to the Italian extra‐virgin olive oil market

Bimbo

Bonanno

Viscecchia

2019

Aus J Agri & Res Econ

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The mislabelling of agricultural and food products is one of the most common types of food fraud. Despite the frequency with which labelling fraud occurs, there is no empirical framework to study its welfare implications, the probability that it may occur, and the measures that can limit its occurrence. We present an empirical framework to study the economic consequences of food labelling fraud in a differentiated products food market. Such framework requires the availability of sales data and the use of an 'attribute-space' demand model. The model is applied to the Italian extra-virgin olive oil market to simulate the occurrence of fraudulent '100 per cent Italian' claims. Our results indicate that potential consumer losses due to overpayments for a false claim are higher than manufacturer gains, suggesting that labelling fraud results in welfare losses and not just in welfare transfers. Simulation results indicate that the level of the current administrative fines is not likely to be effective to discourage '100 per cent Italian' labelling fraud. Imposing larger fines or other measures negatively affecting a firm's image could be more effective in deterring labelling fraud.

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Section: An Empirical Economic Model Of Labelling Fraudmentioning

confidence: 99%

Section: An Empirical Economic Model Of Labelling Fraudmentioning

confidence: 99%

Section: An Empirical Economic Model Of Labelling Fraudmentioning

confidence: 99%

Section: Concluding Remarks Model Extensions and Limitationsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

An empirical framework to study food labelling fraud: an application to the Italian extra‐virgin olive oil market

Bimbo

Bonanno

Viscecchia

2019

Aus J Agri & Res Econ

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Is There a Cult of Statistical Significance in Agricultural Economics?

Rommel¹,

Weltin²

2020

Applied Eco Perspectives Pol

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In an analysis of articles published in ten years of the American Economic Review, Deirdre McCloskey and Stephen Ziliak have shown that economists often fail to adequately distinguish economic and statistical significance. In this paper, we briefly review their arguments and develop a ten-item questionnaire on the statistical practice in the Agricultural Economics community. We apply our questionnaire to the 2015 volumes of the American Journal of Agricultural Economics, the European Review of Agricultural Economics, the Journal of Agricultural Economics, and the American Economic Review. We specifically focus on the "sizeless stare" and the negligence of economic significance. Our initial results indicate that there is room of improvement in statistical practice. Empirical papers rarely consider the power of statistical tests or run simulations. The economic consequences of estimation results are often not adequately addressed. We discuss the implications of our findings for the publication process and teaching in Agricultural Economics.

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A Hedonic Valuation of Health and Nonhealth Attributes in the U.S. Yogurt Market

Bonanno

2015

Agribusiness

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The U.S. yogurt category encompasses a multitude of subcategories including products carrying healthrelated attributes, some products targeting specific segments of the population (i.e., yogurt for kids), and others of recent introduction (e.g., Greek-style yogurts). Given the numerous attributes that can be present in a product, characterizing those leading to a higher premium can help manufacturers to engage in profitable product formulation. This paper investigates the role played by health and nonhealth-related attributes on yogurt prices in the United States, both at the national level and in different geographic markets, by means of a large scanner database of yogurt sales and a hedonic price model. The findings indicate that health-related attributes more commonly associated with yogurts such as the presence of probiotics, specific health claims, and other credence attributes (i.e., organic and "natural") are valued positively while others, which may lead to lower product acceptance (e.g., fibers, Omega-3) are not. Nonhealth-related features, such as "for kids" and Greek-style, show a positive market value, thus helping in product differentiation. The magnitude of the implicit price of most product attributes is found to vary across markets, hinting that food manufacturers should consider market-specific product formulation strategies to achieve product differentiation more effectively. [EconLit citations: Q11; Q13]. C 2015 Wiley Periodicals, Inc.

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Simulating welfare effects of the European nutrition and health claims' regulation: the Italian yogurt market

Cited by 16 publications

References 41 publications

An empirical framework to study food labelling fraud: an application to the Italian extra‐virgin olive oil market

An empirical framework to study food labelling fraud: an application to the Italian extra‐virgin olive oil market

Is There a Cult of Statistical Significance in Agricultural Economics?

A Hedonic Valuation of Health and Nonhealth Attributes in the U.S. Yogurt Market

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