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Abstract
This article uses revealed preferences of consumers to study the consumer benefits from
rBST-free and organic labeled milk. The article specifies and estimates a quadratic AIDS
demand system model for different milk types using US supermarket scanner data. The
introduction of rBST-free and organic milk is used to estimate consumer benefits, which
are decomposed into two components, competitive and variety effects. Results show
significant consumer benefits from organic milk and to a lesser extent from rBST-free
milk. Based on the findings, we explore implications for present U.S. labeling standards.