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On Food Companies Liability for Obesity

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  • Bénédicte Coestier
  • Estelle Gozlan
  • Stéphan Marette

Abstract

The U.S. food industry faces tobacco-style lawsuits for providing misleading information about health risks linked to the consumption of fatty products. This article investigates the link between alternative liability rules and the incentive for disclosing health information to consumers. We show that if the expected damage is relatively low, the absence of intervention is socially optimal. If the expected damage is not too high, mandatory labeling is socially optimal. Liability rules are only welfare-enhancing for high levels of risk and/or when consumers misperceive health warnings. Copyright 2005, Oxford University Press.

Suggested Citation

  • Bénédicte Coestier & Estelle Gozlan & Stéphan Marette, 2005. "On Food Companies Liability for Obesity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 1-14.
    • Handle: RePEc:oup:ajagec:v:87:y:2005:i:1:p:1-14
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    File URL: http://hdl.handle.net/10.1111/j.0002-9092.2005.00697.x
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    References listed on IDEAS

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    1. Endres, A. & Ludeke, A., 1998. "Incomplete strict liability: effects on product differentiation and information provision 1," International Review of Law and Economics, Elsevier, vol. 18(4), pages 511-528, December.
    2. Doughety, Andrew F & Reinganum, Jennifer F, 1997. "Everybody Out of the Pool: Products Liability, Punitive Damages, and Competition," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 13(2), pages 410-432, October.
    3. Eliza M. Mojduszka & Julie A. Caswell, 2000. "A Test of Nutritional Quality Signaling in Food Markets Prior to Implementation of Mandatory Labeling," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 298-309.
    4. Elamin H. Elbasha* & T. Lynn Riggs, 2003. "The effects of information on producer and consumer incentives to undertake food safety efforts: A theoretical model and policy implications," Agribusiness, John Wiley & Sons, Ltd., vol. 19(1), pages 29-42.
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    Cited by:

    1. Boizot-Szantai, Christine & Etile, Fabrice, 2005. "The Food Prices / Body Mass Index Relationship: Theory and Evidence from a Sample of French Adults," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24734, European Association of Agricultural Economists.
    2. Rajeev Goel, 2006. "Obesity: An economic and financial perspective," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 30(3), pages 317-324, September.
    3. Liu, Yaqin & Ferreira, Susana & Colson, Gregory & Wetzstein, Michael, 2013. "Obesity and Counseling," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149947, Agricultural and Applied Economics Association.

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