Does Biotech Labeling Affect Consumers' Purchasing Decisions? A Case Study of Vegetable Oils in Nanjing, China

Abstract

This study analyzes whether biotech labeling has an impact on consumers' purchasing behavior in China using vegetable oils in Nanjing as a case study. An Almost Ideal Demand System (AIDS), which encompasses expenditure shares of individual edible oils, is developed and estimated by seemingly unrelated regression with theoretical constraints. The AIDS model is augmented by the top-level demand for all edible oils in the context of a two-stage budgeting approach. Results from the model based on retail scanning data suggest that biotech labeling induced only a modest switch in vegetable oils consumption away from labeled soybean and blended oils and toward nonbiotech vegetable oils.