One of the most publicized and controversial issues in the food industry today is whether or not food labels convey the appropriate product information to consumers. This study models firms' response to labeling mandates and estimates the costs to the food industry of new or revised labeling regulations. Lengthy personal interviews were conducted with 30 domestic food manufacturers and a questionnaire was administered to nearly 1,500 food manufacturing firms. The model incorporates variables to adjust for the type of food manufactured, the number and sizes of the firms affected, the frequency of label redesigning, the type of printing equipment used, the value of labels ordered, and the frequency of inventory turnover. The model is used to estimate the compliance costs for two past labeling regulations—sulfiting agents and sodium.
