Vincent Réquillart

Economics of Private Labels: A Survey of Literature

This paper is a survey of the recent literature devoted to the economics of private labels. After providing some statistics about the development of private labels for different products in different OECD countries, the survey outlines what the literature says about the factors that favor the development of private labels, the reasons retailers introduce private labels, and the consequences of their development for the relationship between manufacturers and retailers. Issues that are less frequently addressed in the literature are also highlighted. The survey closes with discussing the impact of the development of private labels on welfare.

Increasing fruit and vegetable consumption: a cost-effectiveness analysis of public policies.

BACKGROUND In many countries, consumption of fruits and vegetables (F&V) is below recommended levels. We quantify the economic and health effects of alternative policy (P) scenarios aiming to increase F&V consumption: (P1) 3.4% reduction in VAT, (P2) €100/year/person F&V stamp policy designed for low-income consumers (LIC) and (P3) €10 M information campaign. METHODS An economic model of the F&V market provides F&V consumption variations to a health impact model, leading to the number of deaths avoided (DA) and life-years saved (LYS). We compare the cost per statistical DA and LYS, taking into account the public costs of alternative policies. This analysis is applied to France in 2006. RESULTS Relative risks of death for one additional F&V portion are disease dependent (range: 0.84-0.99). The highest variations in F&V consumption levels (less than +10 g/day/person on average) and health effects (<+600 DA, <+10 000 LYS) are modest. The costs/LYS are smaller for information campaign (€3 k), followed by VAT reduction (€99 k) and food stamp policy (€403 k). However, the information campaign leads to less LYS than VAT reduction. The food stamp policy reduces health inequalities between LIC and others, whereas the other ones can increase them. CONCLUSION Our results suggest that (i) LYS are larger with VAT reduction than F&V stamps policies, (ii) information campaigns are the most cost-effective and (iii) market forces can limit the impacts of public health policies designed to favour F&V consumption increase.

Price Effects of Private Label Development

We study the price response of national brands to the development of private labels. Using monthly data from a consumer survey, we show that prices of national brands increase with the development of private labels. However, we also show that the price increase in national brand products is explained by a strategy of product differentiation. Finally, price reaction of national brands differs with the type of private labels they are facing.

Impact of Cost Shocks on Consumer Prices in Vertically-Related Markets: The Case of The French Soft Drink Market

We develop a structural econometric model of the vertical contracts between soft drink manufacturers and retailers to assess the impact of taxes or changes in production costs on consumer prices. Using individual data on food purchases from a representative survey of 19,000 French households in 2005, we estimate consumer demand using a random utility approach. Among a set of possible vertical relationships, we select the model that best fits the data. We evaluate the pass-through rate of changes in input costs (sugar) or of taxes and show that the industry over-shifts cost changes or excise taxes to the consumers. This result challenges the belief that firms do not pass on the full extent of cost changes or excise taxes to consumers. Copyright 2013, Oxford University Press.

Linkages between sustainable consumption and sustainable production: some suggestions for foresight work

The authors investigate how consumption and production of agricultural products have developed in the past and could possibly evolve in the future. The main focus is on changing consumption patterns and the consequences for food security and for the pressure on natural resources. In this context, the question is raised as to how foresight work can reflect the mechanisms by which a transition towards more sustainable consumption can influence the sustainability of the production systems. The authors first analyze the main drivers of the past and future evolution of food systems and then the implications for foresight analysis. An attempt is made to identify specific issues and policies that should be further analyzed. In particular, future foresight will be challenged to incorporate the interactions between consumption and production more explicitly and to address four issues: (i) intra-national heterogeneity of diets and resulting nutritional outcomes, (ii) externalities resulting from the process of production, processing, and marketing along the product chain, (iii) competition between food and non-food uses of agricultural commodities and between agricultural and non-agricultural use of land and (iv) mechanisms by which food scarcity causes hunger and malnutrition.

Remarks on good vs. bad characteristics in vertical differentiation

Abstract In a recent paper, Garella and Lambertini [Economic Letters 65 (1999) 245] claim that we should distinguish between good and bad characteristics in analysing the incentives for a duopoly to vertically differentiate their products. We prove here that the results obtained by the authors are false and we show that in the context of their model, maximum differentiation should appear whether characteristic is good or bad.

Beyond Wishful Thinking: Integrating Consumer Preferences in the Assessment of Dietary Recommendations.

Convenience, taste, and prices are the main determinants of food choices. Complying with dietary recommendations therefore imposes a “taste cost” on consumers, potentially hindering adoption of those recommendations. The study presents and applies a new methodology, based on economic theory, to quantify this taste cost and assess the health and welfare effects of different dietary recommendations. Then, by comparison of those effects, we identify socially desirable recommendations that are most compatible with consumer preferences (i.e., that best balance health benefits against”taste cost”) and should be prioritized for promotion. The methodology proceeds in three-steps: first, an economic-behavioral model simulates how whole diets would change if consumers complied with dietary recommendations; second, an epidemiological model estimates the number of deaths avoided (DA) due to the dietary change; third, an efficiency analysis weighs the health benefits against the taste and policy costs of each recommendation. The empirical model is calibrated using French data. We find that recommendations to reduce consumption of red meat and soft-drinks, or raise consumption of milk products and fish/seafood impose relatively moderate taste costs. By comparison, recommendations related to F&V consumption and, to a lesser extent, butter/cream/cheese, snacks, and all meats impose larger taste costs on consumers. The F&V recommendation is the costliest for consumers to comply with, but it also reduces diet-related mortality the most, so that a large budget could be allocated to promoting F&V consumption while keeping this policy cost-beneficial. We conclude that promotion of most dietary recommendations improves social welfare. Our framework complements the programming models available in nutrition and public health: those models are best used to identify dietary targets, following which our framework identifies cost-beneficial ways of moving towards those targets.

Fish in Climate-Friendly and Healthy Diets

While the adverse climate and health impacts of the Western diet have been demonstrated, the place of fish/seafood in climate-friendly and healthy diets is unclear. We tackle that question with a model simulating how a rational consumer urged to consume more fish would modify his diet. Those adjustments are translated into health outcomes by an epidemiological model and climate outcomes using life-cycle analysis coefficients. The application to France and Finland compares the impacts of promoting fish consumption to those of urging consumers to decrease their consumption of meat. For the same relative change, raising fish consumption generates more health benefits than decreasing meat consumption, and produces climate benefits as well. Promoting fish consumption is also highly cost-effective and should be prioritized over measures targeting meat consumption. Rather than stigmatizing meat consumers, climate-friendly and healthy diet recommendations may more effectively send a positive message urging citizens to consume more fish.

Accounting for consumers’ preferences in the analysis of dietary recommendations

Background/ObjectivesThe goal of this article is to present and demonstrate the applicability of an original method to assess the economic and health impacts of compliance with food-based recommendations. The method takes account of consumers’ preferences and the associated adoption cost in the assessment of various recommendations.Subjects/MethodsWe combine an economic model of diet choice with an epidemiological model to compute the health impacts of dietary changes. To demonstrate the use of the method, we analyse the impacts of a 5% variation in the consumption of seven food groups taken separately: a 5% increase in consumption of fruits and vegetables (F&V) and milk products; and a 5% decrease in consumption of red meat, all meats, salty/sweet products, ready meals and butter/cream/cheese.ResultsA recommendation, when adopted by consumers, generates important changes in the whole diet due to substitutions and complementarities among foods. All simulated recommendations have a positive impact on health. The F&V recommendation has the largest impact on the number of DALYs averted, but the highest adoption cost for consumers, especially for low-income consumers. Alone, the change in energy intake explains from 71% to 98% of the DALYs averted induced by a recommendation.ConclusionsSmall increases in recommended foods have the potential of generating relatively significant health gains. Preference-driven substitutions among foods have a major effect on simulated health outcomes and should be included in the assessment of dietary recommendations, together with the adoption cost borne by consumers.

Market Competition and the Health Composition of Manufactured Food

There has been surprisingly little research to date on the supply-side role of food manufacturers on equilibrium health outcomes for consumers. In this letter we consider an oligopoly model in which food processors choose the health composition of manufactured food. We show that price competition between food processors leads to unhealthy food composition in the market equilibrium, even under circumstances in which consumers know food composition is unhealthy. Taxes on manufactured food decrease the healthiness of manufactured foods whenever improved consumer health increases the price elasticity of food demand. Copyright