Pricing Strategy for GM Food

Impact of Consumer Attitude Heterogeneity and GMO Food Labelling

Research output: Contribution to journalArticle

Abstract

We consider how a marketer of a GM food product should price it in response to the requirement of GMO food label in the near future and its effect on consumers’ heterogenous attitude. We examine how the GM food pricing is affected by different consumer attitudes toward GM-food (Like, Uninformed, and Dislike), the GMO food labelling to be enforced, and price competition. On the one hand, the GM food seller should expect to raise price after the GMO food labelling to cover the additional cost incurred on labelling. On the other hand, the seller may need to reduce price after labelling as the Uninformed consumers’ attitude may change and become negative once the labelling is available. The tradeoff of these two effects yields interesting results. For example, we find that a monopolist GM food seller may choose to charge a high price, i.e., charge a premium for the GM-traits, and maintain at this price even after the labelling is enforced. Managerial implications and future research directions are discussed.

Original languageEnglish (US)
JournalAnnals of Operations Research
DOIs
StatePublished - Jan 1 2019

Fingerprint

Pricing strategy
GM food
Food labeling
Consumer attitudes
Labeling
Seller
Charge
Price competition
Research directions
Food labels
Pricing
Premium
Costs
Food products
Monopolist
Attitude change
Marketers
Trade-offs

Keywords

  • Consumer attitude towards GM food
  • GM food
  • GMO Food Labelling
  • Pricing

ASJC Scopus subject areas

  • Decision Sciences(all)
  • Management Science and Operations Research

Cite this

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abstract = "We consider how a marketer of a GM food product should price it in response to the requirement of GMO food label in the near future and its effect on consumers’ heterogenous attitude. We examine how the GM food pricing is affected by different consumer attitudes toward GM-food (Like, Uninformed, and Dislike), the GMO food labelling to be enforced, and price competition. On the one hand, the GM food seller should expect to raise price after the GMO food labelling to cover the additional cost incurred on labelling. On the other hand, the seller may need to reduce price after labelling as the Uninformed consumers’ attitude may change and become negative once the labelling is available. The tradeoff of these two effects yields interesting results. For example, we find that a monopolist GM food seller may choose to charge a high price, i.e., charge a premium for the GM-traits, and maintain at this price even after the labelling is enforced. Managerial implications and future research directions are discussed.",
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