How Labeling of Safety and Process Attributes Affects Markets for Food

Abstract

Consumers are increasingly considering information on the safety and process (how foods are produced) attributes of food in making their buying decisions. Producers, processors, and retailers may choose voluntary labeling of these attributes, may be required to label by government regulations, or may use a combination of these approaches. The market effects depend on consumer perceptions of the attributes, the benefits and costs of labeling for companies, and the goals of government policy. These effects are illustrated through a discussion of labeling of foods that are produced with the use of biotechnology (genetically modified organisms) or that are organically grown.