Milk by Any Other Name … Consumer Benefits from Labeled Milk

Abstract

Abstract This article uses revealed preferences of consumers to study the consumer benefits from rBST‐free and organic labeled milk. The article specifies and estimates a quadratic AIDS demand system model for different milk types using U.S. supermarket scanner data. The introduction of rBST‐free and organic milk is used to estimate consumer benefits that are decomposed into two components, competitive and variety effects. Results show significant consumer benefits from organic milk and to a lesser extent from rBST‐free milk. Based on the findings, we explore implications for present U.S. labeling standards.