Reducing meat consumption has become a global environmental target. We provide novel evidence on how price change in real life affects grocery shopping behavior in the Netherlands. We focus on price-induced behavioral response among major meat categories (beef, pork, and poultry), fish, and the emerging product category of plant-based meat substitutes. Our analysis is based on detailed weekly transaction data from approximately 1,500 products in 884 stores from several retail chains between 2015 and 2019. The own- and cross-price elasticities are estimated using quadric Almost Ideal Demand System models. Results show that beef, poultry and fish have inelastic own-price elasticities, while the demand for pork and meat substitutes are price elastic. The cross-price elasticities indicate that pork is a substitute to meat substitutes, while other types of animal products are complements for meat substitutes. Our findings support that a potential meat tax on beef and pork will be effective in leading to the substitution to plant-based proteins. We further assess the effect of two different meat tax designs in the Netherlands including a uniform tax by increasing the value-added tax for meat and an excise tax that considers the external costs of carbon emissions.
Demand-side policies may not be as effective as predicted when supply-side constraints limit consumers' choice sets. This is particularly an issue in environmental policies as the targeted new green alternatives often form a niche market where competition is imperfect. I study the food retail industry where meat taxation has been discussed as a potential demand-side policy to stimulate the transition to plant-based proteins. Such policies will provide homogeneous price incentives to all consumers, however, the heterogeneous product variety of the green alternatives in the local market will result in differentiated tax effectiveness and welfare effects. I focus on weekly store-level supermarket consumption of meat, fish, and plant-based substitutes from 2015 to 2019 in the Netherlands. I use the IV method to examine to what extent the limited variety of plant-based substitutes affects demand response to price incentives and substitution from animal-based to plant-based products. I find that offering consumers more product variety of plant-based substitutes will lead to more environmental-friendly food consumption behavior while a ''tofu desert", where the choices of plant-based products are very limited, will hinder the protein transition. Controlling for the product variety of plant-based substitutes that consumers are facing will also lead to different price elasticities, which is important to consider when designing meat taxation policies.
This study uses an experimental setting to test if price elasticities change under low and high Pigouvian tax scenarios. The unique experimental design also allows us to disentangle the price and non-price effects of meat taxation and its interaction with carbon labeling on the substitution between animal and plant proteins. We introduce an innovative choice experiment design that allows for choosing multiple products and quantities while providing participants with customized choice cards. We do so to imitate a more realistic scenario for household food consumption choices and hence reduce hypothetical bias. We conduct a survey experiment on a representative sample of 2088 Dutch households and analyze the data using Multiple Discrete-Continous Extreme Value (MDCEV) models. Our findings indicate that meat consumption is price elastic, while price elasticities linearly increase in response to larger price changes of meat. However, we do not observe a corresponding substitution towards plant-based meat substitutes. Messages on tax framing and revenue redistribution do not generate additional behavioral shifts or backfire. Moreover, we find no significant effects of carbon labeling on behavior change, nor any significant interaction effects between taxation and labeling.