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An Economic Analysis Of Nanofood Labeling

Author

Listed:
  • Tran, Van T.
  • Yiannaka, Amalia
  • Giannakas, Konstantinos
Abstract
The paper examines the economic effects of labeling of food nanotechnology products using an analytical framework of heterogeneous consumers and imperfectly competitive suppliers. Labeling results in increased costs for nanofood producers that in turn increase nanofood prices and reduce their market demand; the cost effect of the labeling policy. Labeling also affects consumer preferences, the preference effect, by reducing uncertainty regarding the nature of the food product (certainty effect), and by potentially being perceived as a warning signal (stigma effect). The market and welfare impacts of nanofood labeling depend on which of the above effects dominate. If consumer aversion towards food nanotechnology increases due to labeling, nanofood suppliers incur losses to the benefit of suppliers of conventional and organic food substitutes and welfare decreases for most of consumers. Consumers who experience greater losses are those with relatively high aversion to interventions in the production process. On the other hand, if the labeling regime results in consumers becoming less averse to food nanotechnology and the preference effect dominates the cost effect, then nanofood suppliers see their profits increase. The economic impacts of nanofood labeling are intensified when consumers have low awareness of food nanotechnology prior to the implementation of the labeling policy and/or when competition among food suppliers is more intense.

Suggested Citation

  • Tran, Van T. & Yiannaka, Amalia & Giannakas, Konstantinos, 2014. "An Economic Analysis Of Nanofood Labeling," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170220, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea14:170220
    DOI: 10.22004/ag.econ.170220
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    References listed on IDEAS

    as
    1. Olivier Bonroy & Christos Constantatos, 2015. "On the Economics of Labels: How Their Introduction Affects the Functioning of Markets and the Welfare of All Participants," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 239-259.
    2. Murray Fulton & Konstantinos Giannakas, 2004. "Inserting GM Products into the Food Chain: The Market and Welfare Effects of Different Labeling and Regulatory Regimes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 42-60.
    3. Jonathan Brown & Jennifer Kuzma, 2013. "Hungry for Information: Public Attitudes Toward Food Nanotechnology and Labeling," Review of Policy Research, Policy Studies Organization, vol. 30(5), pages 512-548, September.
    4. Konstantinos Giannakas & Amalia Yiannaka, 2008. "Market and Welfare Effects of Second-Generation, Consumer-Oriented GM Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(1), pages 152-171.
    5. Michael Siegrist & Carmen Keller, 2011. "Labeling of Nanotechnology Consumer Products Can Influence Risk and Benefit Perceptions," Risk Analysis, John Wiley & Sons, vol. 31(11), pages 1762-1769, November.
    6. Tran, Van & Yiannaka, Amalia & Giannakas, Konstantinos, 2016. "Consumer Perceptions And Willingness-To-Pay For Nanotechnology Applications That Enhance Food Safety," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235918, Agricultural and Applied Economics Association.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Food Consumption/Nutrition/Food Safety;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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