Shrinkflation, Unit Price Disclosure, and Consumer Welfare: Evidence from Canned Tuna

Abstract

Shrinkflation has become a favored strategy among food manufacturers to subtly raise the unit price. However, the effectiveness of policies aimed at alerting consumers to these covert unit price hikes remains underexplored. Leveraging variation in unit price disclosure regulations across different states, this paper estimates the welfare impact of price per unit disclosure in the context of a coordinated shrinkflation event in the canned tuna industry. Our findings reveal that consumers in states with unit price disclosure regulations are more responsive to unit price changes compared to those in states without such regulations. Our analysis suggests that implementing unit price disclosure regulations would enhance consumer welfare by approximately $10.93 million dollars annually.

Keywords: attribute disclosure, collusion, greedflation, scanner data, shrinkflation

JEL Classification: H30, L81, L38