Pricing Strategy for GM Food: Impact of Consumer Attitude Heterogeneity and GMO Food Labelling

Research output: Contribution to journalArticle

1 Scopus citations

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)
Pages (from-to)463-474
Number of pages12
JournalAnnals of Operations Research
Volume291
Issue number1-2
DOIs
StatePublished - Aug 1 2020

Keywords

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

ASJC Scopus subject areas

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

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