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The effects of banning advertising in junk food markets

Journal article | Review of Economic Studies

There are growing calls to restrict advertising of junk foods. Whether such a move will improve diet quality will depend on how advertising shifts consumer demands and how firms respond. We study an important and typical junk food market – the potato chips market. We exploit consumer level exposure to adverts to estimate demand, allowing advertising to potentially shift the weight consumers place on product healthiness, tilt demand curves, have dynamic effects and spillover effects across brands. We simulate the impact of a ban and show that the potential health benefits are partially offset by firms lowering prices and by consumer switching to other junk foods.

 

 

 

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External publication
There have been calls for restrictions on junk food advertising to tackle rising rates of obesity around the world. This column examines the likely effect of a ban on potato crisp advertising. Results suggest that the total quantity of crisps sold would fall by around 15% in the presence of a ban, ...
Video clip
How to tackle rising obesity? In this VoxEUvideo, Martin O’Connell referring to the crisps market discusses how restrictions on advertisement could influence consumption.
Journal article | CESifo Economic Studies
Corrective taxes have been implemented in a number of countries with the aim of addressing growing concern about the rise in obesity- and diet-related diseases. The rationale is that food consumption imposes costs on the consumer in the future that they do not fully take into account at the point ...
Blog
Rachel Griffith explains the significance of her research, which was funded through the European Research Council.