Food policies: balancing health and market in the era of ubiquitous ultra-processed foods

As the development of modern food systems continues to reshape dietary habits, the need for effective food policies to counter the rise of ultra-processed foods (UPFs) becomes increasingly urgent. UPFs are industrial formulations of several highly refined ingredients and additives with little or no nutritional value but potentially harmful health effects. In this paper, we develop a simple model of duopolistic competition in which food manufacturers compete by choosing the degree of food sophistication of their products (i.e., the degree of food formulation and processing). We show that when firms compete for market shares, an unhealthy degree of food sophistication is a strategically stable Nash-Bertrand equilibrium outcome. Furthermore, we compare the effectiveness of alternative health-related food policies. Our model highlights the shortcomings of nutrient-to-limit regulations and suggests that policy interventions should prioritize whole-food reformulation-based approaches within an 'ecological' regulatory framework.