Consumer perceptions and labeling regimes as determinants of the market and welfare effects of food nanotechnology innovations

In recent years nanotechnology has emerged as a production method that can be used to enhance nutrition and provide new varieties of food products as well as reduce food safety risks. While the potential benefits of food nanotechnology hold exciting promise, its potential risks are not well understood. With advocates determined to not repeat the mistakes of biotechnology, it is clear that understanding the factors that determine the market acceptance of food nanotechnology and its potential impact on various interest groups can inform the design of effective policies and strategies for food nanotechnology innovations. In this context, the current study has developed an analytical framework of heterogeneous consumers and imperfectly competitive suppliers to identify the determinants of the market acceptance of food nanotechnology, determine the effects of this technology on the interest groups involved and analyze the market and welfare effects of a mandatory labeling regime. In addition, a survey instrument was developed to empirically examine the factors that shape consumers’ risks and benefits perceptions and the effects of the provision of balanced information on consumers’ willingness-to-pay (WTP) for nano-based packaging that could improve food safety. We also examine and contrast the effects of loss and gain information framings and investigate whether the framing increases consumers’ acceptance and WTP by emphasizing the enhanced attributes of nanotechnology or whether it produces, instead, anxiety that spills over to nanotechnology. Analytical findings show that the market and welfare effects of the introduction of food nanotechnology innovations are case-specific and dependent on the relative quality rankings of the nanofood and its counterparts. In addition, the effects of nanofood labeling vary depending on the relative magnitude of the cost, certainty and stigma effects of nanofood labeling. Empirical results provide evidence of strong associations between consumers’ risks and benefits perceptions of food nanotechnology and their WTP for the use of nanotechnology in food packaging that can improve food safety. Finally, the nature of information provided to the public is shown to affect consumer benefits and risks perceptions of food nanotechnology and their WTP for food nanotechnology applications