Common Labels and Market Mechanisms

In this article, the impact of common labels is investigated with both theoretical and empirical approaches. Recent statistics regarding the egg market in France suggest that retailer brands largely adopt common labels. A simple theoretical framework enables us to determine the conditions under which producers and/or retailers with different product qualities decide to post a common label on their products. In particular, a situation of multiple equilibria (one where the label is used by the high-quality seller only and one where it is used by the low-quality seller only) is exhibited when the cost of the label is relatively large. The demand is then estimated for different segments of the French egg market, including producer/retailer brands with/without common labels. The estimates are used to derive expenditure and price elasticities and allow us to calculate welfare measures revealing a relatively large willingness-to-pay for labels

The impact of information on wine auction prices: results of an experiment

Résumé Ce travail présente les résultats d'une enchère expérimentale de vin. Les participants de l'expérience ontété répartis de façon aléatoire dans trois salles. Dans chaque salle, quatre vinsétaientévalués, mais le niveau d'information auquel les participants avaient accès différait d'une salleà l'autre. Une fois leś evaluations terminées, les vinsétaient vendus séquentiellement lors de quatre enchères Vickrey indépendantes avec prix de réserve secrets. Nous trouvons que certaines caractéristiques socio-économiques comme le sexe, le revenu et les habitudes de consommation, ont un effet significatif sur la dispositionà payer pour un vin, alors que d'autres comme l'âge et la nationalité n'en ont pas. Nous trouvonségalement qu'une fois que les individus ont lu les caractéristiques desétiquettes et qu'ils ont consulté les extraits de guides, le goût des vins n'a pas d'effet supplémentaire sur la dispositionà payer. En revanche, si les individus qui ont dégusté les vinsà l'aveugle sont informés des caractéristiques deś etiquettes et des appréciations des spécialistes, leur dispositionà payer augmente substantiellement. Abstract This paper reports the results of an experimental wine auction. Participants of the experiment were randomly assigned to three rooms. In each room four wines had to be evaluated, but the level of information to which participants had access differed across rooms. After the evaluations, the wines were sold sequentially, by four separate Vickrey auctions with secret reservation prices. We find that certain socio-economic characteristics such as gender, income and consumption habits, have a significant impact on the willingness to pay for wine, while others such as age and nationality, do not. We also find that once individuals have read the label characteristics and extracts from wine guides, the taste of the wines does not have an additional impact on willingness to pay. Conversely, if individuals who have only tasted the wines blindly are informed about the wine characteristics and opinions from experts, their willingness to pay increases substantially

The allocation of time and goods in household activities: A test of separability

In this paper, we test for the weak separability hypothesis imposed by the household production model between goods and time inputs used in the production of different commodities. Our data come from a French survey which reports both expenditures and time that households devote to some activities. The results allow us to show that the weak separability assumption cannot be rejected only when households are strongly time constrained. In the opposite case, home time uses are found to be nonseparable.Conditional demand functions, household production model, separability test

What Determines Wine Prices: Objective vs. Sensory Characteristics

International audienc

Estimating almost-ideal demand systems with endogenous regressors

In this article, we present the new \texttt{aidsills} command for estimating almost-ideal demand systems and their quadratic extensions. In contrast with Poi's (2012, {\sl Stata Journal} 12: 433--446) \texttt{quaids} command, which is based on the nonlinear \texttt{nlsur} command, {\tt aidsills} uses the computationally attractive iterated linear least-squares estimator developed by Blundell and Robin (1999, {\sl Journal of Applied Econometrics} 14: 209--232). The new command further allows one to account for endogenous prices and total expenditure by using instrumental-variable techniques. Elasticities and their standard errors can be obtained using the \texttt{aidsills\_elas} postestimation command

Mandatory labels, taxes and market forces: An empirical evaluation of fat policies

International audienceThe public-health community views mandatory Front-of-Pack (FOP) nutrition labels and nutritional taxes as promising tools to control the growth of food-related chronic diseases. This paper uses household scanner data to propose an ex-ante evaluation and comparison of these two policy options for the fromage blanc and dessert yogurt market. In most markets, labelling is voluntary and firms display fat labels only on the FOP of low-fat products to target consumers who do not want to eat fat. We here separately identify consumer preferences for fat and for FOP fat labels by exploiting an exogenous difference in legal labelling requirements between these two product categories. Estimates of demand curves are combined with a supply model of oligopolistic price competition to simulate policies. We find that a feasible ad valorem fat tax dominates a mandatory FOP-label policy from an economic perspective, but both are equally effective in reducing average fat purchases

Mandatory labels, taxes and market forces: An empirical evaluation of fat policies

The public-health community views the mandatory labelling and taxation of fat as promising tools to control the growth of food-related chronic disease. This paper is the first to propose an ex ante evaluation of these two policy options in an oligopolistic setting with differentiated products and heterogeneous demand. Using household scanner data on fromages blancs and dessert yogurts, we separately identify consumer preferences for fat and front-of-pack fat labels by exploiting an exogenous difference in legal labelling requirements between these two product categories. Demand estimates are then combined with a supply model to evaluate both policies. In the absence of any producer price response, making fat labels mandatory reduces the fat supplied to regular consumers in this market by 38%; an ad-valorem tax of 10% (5%) on the producer price of full-fat (half-skimmed) products has a similar impact. Allowing producer price reactions, however, yields much smaller effects: a 9% drop for the fat tax, and a fall of only 1:5% for mandatory labels. Producers thus neutralise up to 96% of the impact of mandatory labelling on demand, via large price cuts on products with large ex ante margins. This illustrates how market forces are largely able to defeat the intended effect of market-based public-health interventions