Impact of Information Provision on Consumer Preference and Demand Within a Multitier Food Label System

Current research on the impact of information provision predominantly pertains to binary food label systems, with limited discussion on multitier food label systems. We propose a parsimonious conceptual framework showing that information provision does not necessarily benefit the multitier labelled food market. The impact depends on how consumers misperceive the quality of labelled food and the extent to which information provision alleviates such misperception. We supplement our conceptual framework with an empirical investigation of China's eco‐labels. We find that information provision results in higher willingness to pay, market share and value of information for eco‐labelled aquatic products and a preference order aligning closely with the stringency of regulation on these eco‐labels. These findings, in conjunction with our theoretical framework, suggest an underestimation of the quality of eco‐labelled aquatic products. Our study provides policymakers and relevant stakeholders with a framework to identify the impact and conditions of information provision within a multitier food label system.