On Food Companies Liability for Obesity |
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Authors: | Bénédicte Coestier Estelle Gozlan Stéphan Marette |
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Institution: | Bénédicte Coestier is maître de conférences, Department of Economics, and member, Thema, Universitéde Paris X, Nanterre, France. Estelle Gozlan is an economist, UMR d'Economie Publique INRA-INAPG, Paris, France. Stéphan Marette is an economist, UMR d'Economie Publique INRA-INAPG, Paris, France. |
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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. |
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Keywords: | health risk information liability negligence regulation |
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