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Beyond Consumer Switching: Supply Responses to Food Packaging and Advertising Regulations

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  • Jorge Alé-Chilet

    (Department of Economics, Bar-Ilan University, 5290002 Ramat Gan, Israel)

  • Sarah Moshary

    (Booth School of Business, University of Chicago, Chicago, Illinois 60637)

Abstract

This paper studies the effect of nutrition warning labels and advertising restrictions on the breakfast cereal market in Chile. In June 2016, the Ministry of Health required food products that exceed thresholds for sugar (22.5 g) and calories (350 kcal) to carry conspicuous front-of-package warning labels. Furthermore, these products were barred from advertising on television programs with high child viewership. Early evidence suggests that the regulation induces consumers to switch to products without warning labels; we show that this change in demand elicits a supply response. In particular, we present evidence of bunching just below the cutoffs. Using a structural model of cereal demand, we find that reformulation tends to reinforce the intent of the reform, in particular, by lowering the calorie content of cereal purchases.

Suggested Citation

  • Jorge Alé-Chilet & Sarah Moshary, 2022. "Beyond Consumer Switching: Supply Responses to Food Packaging and Advertising Regulations," Marketing Science, INFORMS, vol. 41(2), pages 243-270, March.
    • Handle: RePEc:inm:ormksc:v:41:y:2022:i:2:p:243-270
    DOI: 10.1287/mksc.2021.1315
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    References listed on IDEAS

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    3. Sebastián Araya & Andrés Elberg & Carlos Noton & Daniel Schwartz, 2022. "Identifying Food Labeling Effects on Consumer Behavior," Marketing Science, INFORMS, vol. 41(5), pages 982-1003, September.
    4. Antoniades, Alexis & Clerides, Sofronis & Xu, Mingzhi, 2023. "Multi-product firm price and variety response to firm-specific cost shocks," International Journal of Industrial Organization, Elsevier, vol. 90(C).
    5. Grace Melo & Laura Chomali & Ariun Ishdorj, 2024. "From sweet tooth to healthy choices: How Chilean food policies are changing household diets," Agribusiness, John Wiley & Sons, Ltd., vol. 40(3), pages 550-570, July.
    6. Rahman, Rajib & Rojas, Christian, 2024. "The Effect of Singapore’s Sugar-Sweetened-Beverage Advertising Ban on Product Entry," 2024 Annual Meeting, July 28-30, New Orleans, LA 344019, Agricultural and Applied Economics Association.
    7. Ezgi Cengiz & Christian Rojas, 2024. "Are food manufacturers reducing sugar content? Evidence from scanner data," Agribusiness, John Wiley & Sons, Ltd., vol. 40(3), pages 571-595, July.

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