IDEAS home Printed from https://ideas.repec.org/p/ags/ucozwp/148344.html
   My bibliography  Save this paper

The Use of Voluntary Marketing Initiatives to Improve the Nutritional Profile of Kids Cereals

Author

Listed:
  • Cohen, Michael
  • Huang, Rui
  • Zhu, Chen

Abstract

This article develops a framework to analyze voluntary marketing initiatives aimed at reducing children’s exposure to high-calorie packaged foods. Our empirical investigation focuses on children’s ready-to-eat cereal; we begin by estimating a limited awareness differentiated product demand model using a panel of consumer purchase and television advertising data. We use the demand estimates in a dynamic model of pricing and advertising competition in which firms have the option of participating in an initiative that defines nutritional standards for products targeted toward children. Participation requires that firms either comply with nutritional standards by reformulating their product or stop advertising. Results from our analysis indicate that leading firms should choose participation and reformulation as the strictly dominant strategy as long as prospective product reformulation costs do not exceed the marginal profitability of reformulation.

Suggested Citation

  • Cohen, Michael & Huang, Rui & Zhu, Chen, 2012. "The Use of Voluntary Marketing Initiatives to Improve the Nutritional Profile of Kids Cereals," Working Paper series 148344, University of Connecticut, Charles J. Zwick Center for Food and Resource Policy.
  • Handle: RePEc:ags:ucozwp:148344
    DOI: 10.22004/ag.econ.148344
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/148344/files/wp11.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.148344?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jean‐Pierre Dubé & Jeremy T. Fox & Che‐Lin Su, 2012. "Improving the Numerical Performance of Static and Dynamic Aggregate Discrete Choice Random Coefficients Demand Estimation," Econometrica, Econometric Society, vol. 80(5), pages 2231-2267, September.
    2. David M. Cutler & Edward L. Glaeser & Jesse M. Shapiro, 2003. "Why Have Americans Become More Obese?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 93-118, Summer.
    3. Amil Petrin, 2002. "Quantifying the Benefits of New Products: The Case of the Minivan," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 705-729, August.
    4. Na Li Dawson & Kathleen Segerson, 2008. "Voluntary Agreements with Industries: Participation Incentives with Industry-Wide Targets," Land Economics, University of Wisconsin Press, vol. 84(1), pages 97-114.
    5. Yan Chen & Ginger Zhe Jin, 2012. "The Informative Role of Advertising and Experience in Dynamic Brand Choice: An Application to the Ready-to-Eat Cereal Market," Springer Books, in: Ramanan Laxminarayan & Molly K. Macauley (ed.), The Value of Information, edition 127, chapter 0, pages 91-141, Springer.
    6. Gene M. Grossman & Carl Shapiro, 1984. "Informative Advertising with Differentiated Products," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(1), pages 63-81.
    7. Nitin Mehta & Surendra Rajiv & Kannan Srinivasan, 2003. "Price Uncertainty and Consumer Search: A Structural Model of Consideration Set Formation," Marketing Science, INFORMS, vol. 22(1), pages 58-84, June.
    8. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    9. Sass, Tim R & Saurman, David S, 1995. "Advertising Restrictions and Concentration: The Case of Malt Beverages," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 66-81, February.
    10. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    11. Jerry A. Hausman, 1996. "Valuation of New Goods under Perfect and Imperfect Competition," NBER Chapters, in: The Economics of New Goods, pages 207-248, National Bureau of Economic Research, Inc.
    12. Christopher R. Knittel & Konstantinos Metaxoglou, 2008. "Estimation of Random Coefficient Demand Models: Challenges, Difficulties and Warnings," NBER Working Papers 14080, National Bureau of Economic Research, Inc.
    13. Craig A. Gallet, 2003. "Advertising and Restrictions in the Cigarette Industry: Evidence of State‐by‐State Variation," Contemporary Economic Policy, Western Economic Association International, vol. 21(3), pages 338-348, July.
    14. Rinaldo Brau & Carlo Carraro, 2011. "The design of voluntary agreements in oligopolistic markets," Journal of Regulatory Economics, Springer, vol. 39(2), pages 111-142, April.
    15. Chidmi, Benaissa & Lopez, Rigoberto A., 2007. "AJAE Appendix: Brand-Supermarket Demand for Breakfast Cereals and Retail Competition," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 89(2), pages 1-5, May.
    16. Chiang, Jeongwen & Chib, Siddhartha & Narasimhan, Chakravarthi, 1998. "Markov chain Monte Carlo and models of consideration set and parameter heterogeneity," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 223-248, November.
    17. Jean-Pierre Dubé & Günter Hitsch & Puneet Manchanda, 2005. "An Empirical Model of Advertising Dynamics," Quantitative Marketing and Economics (QME), Springer, vol. 3(2), pages 107-144, June.
    18. Günter J. Hitsch, 2006. "An Empirical Model of Optimal Dynamic Product Launch and Exit Under Demand Uncertainty," Marketing Science, INFORMS, vol. 25(1), pages 25-50, 01-02.
    19. Joseph Pancras, 2010. "A Framework to Determine the Value of Consumer Consideration Set Information for Firm Pricing Strategies," Computational Economics, Springer;Society for Computational Economics, vol. 35(3), pages 269-300, March.
    20. Ackerberg, Daniel A, 2001. "Empirically Distinguishing Informative and Prestige Effects of Advertising," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 316-333, Summer.
    21. Patrick Bajari & C. Lanier Benkard, 2005. "Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1239-1276, December.
    22. Draganska, Michaela & Klapper, Daniel, 2010. "Choice Set Heterogeneity and the Role of Advertising: An Analysis with Micro and Macro Data," Research Papers 2063, Stanford University, Graduate School of Business.
    23. Matthew Shum, 2004. "Does Advertising Overcome Brand Loyalty? Evidence from the Breakfast‐Cereals Market," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(2), pages 241-272, June.
    24. Benaissa Chidmi & Rigoberto A. Lopez, 2007. "Brand-Supermarket Demand for Breakfast Cereals and Retail Competition," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 324-337.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cohen, Michael & Huang, Rui, 2012. "Corporate Social Responsibility for Kids’ Sake: A Dynamic Model of Firm Participation," Working Paper series 148347, University of Connecticut, Charles J. Zwick Center for Food and Resource Policy.
    2. Michael Cohen & Rui Huang, 2012. "Corporate Social Responsibility for Kids’ Sake: A Dynamic Model of Firm Participation," Working Papers 12, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    3. Zhu, Chen & Lopez, Rigoberto A. & Liu, Xiaoou, 2019. "Consumer responses to front-of-package labeling in the presence of information spillovers," Food Policy, Elsevier, vol. 86(C), pages 1-1.
    4. Draganska, Michaela & Klapper, Daniel, 2010. "Choice Set Heterogeneity and the Role of Advertising: An Analysis with Micro and Macro Data," Research Papers 2063, Stanford University, Graduate School of Business.
    5. Steven T. Berry & Philip A. Haile, 2021. "Foundations of Demand Estimation," Cowles Foundation Discussion Papers 2301, Cowles Foundation for Research in Economics, Yale University.
    6. Liu, Yizao & Lopez, Rigoberto A. & Zhu, Chen, 2014. "The Impact of Four Alternative Policies to Decrease Soda Consumption," Agricultural and Resource Economics Review, Cambridge University Press, vol. 43(1), pages 53-68, April.
    7. Simon P. Anderson & Federico Ciliberto & Jura Liaukonyte & Régis Renault, 2016. "Push-me pull-you: comparative advertising in the OTC analgesics industry," RAND Journal of Economics, RAND Corporation, vol. 47(4), pages 1029-1056, November.
    8. Michael Cohen & Adam Rabinowitz, 2012. "An Empirical Analysis of Equilibrium Pricing and Advertising in the Ready-To-Eat Cereal Market," Working Papers 15, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    9. Moon, Hyungsik Roger & Shum, Matthew & Weidner, Martin, 2018. "Estimation of random coefficients logit demand models with interactive fixed effects," Journal of Econometrics, Elsevier, vol. 206(2), pages 613-644.
    10. Alicia Barroso & Gerard Llobet, 2011. "Advertising and Consumer Awareness of New, Differentiated Products," Working Papers wp2011_1104, CEMFI.
    11. Xuan, Chen & Rabinowitz, Adam & Liu, Yizao, 2016. "Private Labels Competition and Retailers Market Power: The Case of Fluid Milk Market in Connecticut," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235678, Agricultural and Applied Economics Association.
    12. Christos Genakos & Kai‐Uwe Kühn & John Van Reenen, 2018. "Leveraging Monopoly Power by Degrading Interoperability: Theory and Evidence from Computer Markets," Economica, London School of Economics and Political Science, vol. 85(340), pages 873-902, October.
    13. Chen, Xuan & Liu, Yizao & Rabinowitz, Adam N., 2017. "Private Labels Competition, Retail Pricing and Bargaining Power: The Case of Fluid Milk Market," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252823, Southern Agricultural Economics Association.
    14. Brett R. Gordon & Wesley R. Hartmann, 2013. "Advertising Effects in Presidential Elections," Marketing Science, INFORMS, vol. 32(1), pages 19-35, June.
    15. Griffith, Rachel & Dubois, Pierre & O'Connell, Martin, 2014. "The Effects of Banning Advertising on Demand, Supply and Welfare: Structural Estimation on a Junk Food Market," CEPR Discussion Papers 9942, C.E.P.R. Discussion Papers.
    16. C. Robert Clark, 2007. "Advertising Restrictions and Competition in the Children’s Breakfast Cereal Industry," Journal of Law and Economics, University of Chicago Press, vol. 50(4), pages 757-780.
    17. Li, Xun & Lopez, Rigoberto A., 2015. "Energy Price Transmission and Retail Milk Prices," Working Papers 38, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    18. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899.
    19. Adalja, Aaron A., 2018. "The Impact of Voluntary Non-GMO Labeling on Demand in the Ready-to-Eat Cereal Industry," 2018 Annual Meeting, August 5-7, Washington, D.C. 273817, Agricultural and Applied Economics Association.
    20. Lu, Zhentong & Shi, Xiaoxia & Tao, Jing, 2023. "Semi-nonparametric estimation of random coefficients logit model for aggregate demand," Journal of Econometrics, Elsevier, vol. 235(2), pages 2245-2265.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:ucozwp:148344. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/fmuctus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.