Toward Optimal Meat Consumption

Abstract

External cost from meat consumption raises an issue of possible government mechanisms toward mitigation. Economic theory provides a framework for determining the optimal set of mechanisms considering the associated benefits and costs. Such a theoretical development rests on consumers' responsiveness to alternative mechanisms. Considering two mechanisms, a Pigouvian tax and green‐label education, yields tandem theoretical optimal government mechanisms. Populating this theoretical model with empirically derived elasticities and other parameters provides an application. Results indicate education alone will likely not yield a high social‐optimal level of mitigation. Instead, if external costs warrant government mechanisms, a Pigouvian tax will be required to move consumption toward a socially optimal state.

Keywords: Animal rights, climate change, health effects, labeling, meat tax, prosocial, sustainability