A Portion Cap Rule with Two Products: An Experimental Evaluation
Published in Canadian Journal of Agricultural Economics, 2022
Portion cap rules have been proposed to regulate the consumption of foods and ingredients deemed unhealthy. Challenging common intuition, previous theoretical work posits that, when the seller leverages bundling to price-discriminate, buyers are not necessarily affected and some may even benefit from a quantity restriction. I conduct an experiment designed to test this claim. In the laboratory, human subjects take the role of sellers and offer two products to automated buyers with private preferences. I manipulate the policy environment across treatments. The data largely corroborate the anticipated impacts on consumer surplus, speaking to their robustness. In particular, consumers with a low appreciation for the regulated good and a high valuation for the unrestricted item benefit from the cap rule.