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On Food Companies Liability for Obesity
Author(s) -
Coestier Bénédicte,
Gozlan Estelle,
Marette Stéphan
Publication year - 2005
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/j.0002-9092.2005.00697.x
Subject(s) - liability , business , consumption (sociology) , incentive , intervention (counseling) , strict liability , welfare , actuarial science , economics , finance , microeconomics , psychology , market economy , social science , psychiatry , sociology
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.