Live comments from the CCP Summer Conference 2014 – Session 8
June 13, 2014 Leave a comment
Session 8: Competition with Divergent Public Policy Concerns:
Rachel Griffith (Institute of Fiscal Studies and University of Manchester) discussed government intervention in food markets, which deliver what consumers demand but nevertheless raise public policy concerns. These concerns typically focus on obesity and diet-related disease, such as poor nutrition for both adults and children. Rachel elaborated the role for government intervention based on externalities (which can be small), information failures (both in terms of information availability and consumers’ willingness or ability to process information) and market power. She then discussed possible policy options, from education and fiscal measures to “nudge” policies, which try to alter incentives and choices presented to consumers. The effectiveness of these policies, however, depends on aims and the resulting market equilibrium. In a study conducted in cooperation with the IFS of bans on advertising junk food, Rachel estimates demand and supply in the UK crisps market with structural parameters that simulate counterfactual situations. She finds that banned advertising would lead to tougher price competition but the crucial welfare condition can be vague as the effect of advertising is not clear.