The Australian egg industry is facing adjustment pressures including from animal welfare developments. Production and consumption of free-range eggs are rising in response. However, considerations have been given to banning the dominant conventional cage production as in Switzerland. Consideration has also been given to compulsory labelling eggs by their form of production. A focus of the research is to develop possible future scenarios and to value any associated animal welfare benefits against the cost of changes. The extent of market failures such as negative externalities from the consumption of conventional cage eggs will be an important aspect of the analysis.