Friday, December 08, 2006

Trans Fat Market Failure

By now you've probably read about the ban on artificial trans fats in food that was just passed in New York City. Never mind whether it's a good idea or not - one paragraph of the CNN story was quite interesting:

McDonalds Corp. has been experimenting with healthier oil blends but has not committed to a full switch yet, though it has said it will be ready for a New York City ban. Wendy's International Inc. introduced a zero-trans fat oil in August and Yum Brands Inc.'s KFC and Taco Bell said they also will cut trans fats from their kitchens.

You'd expect the fast food giants to be howling about this the loudest, but it turns out that they've all been thinking about the issue already?

Why? Probably because the content of their food has come under all kinds of criticism in the last few years. Consumers are more conscious now of what they are eating; the fast food companies saw this, recognized it as a market shift, and are trying to improve their product.

It's the smart thing to do when you see such a shift coming. It's a dramatic contrast to, for example, the auto industry, which claims every new safety device will destroy their industry until they're forced to adopt them and start featuring them in their ads.

The muted response from McDonalds and friends actually relates to an interesting thing about this law; while it's been discussed as an example of nanny state legislation that assumes that New Yorkers can't make their own food decisions, that's not quite accurate. The  ban came about, I think, because of a market failure: the artificial fats are so widely used that it's hard to find quick food without them (or often, to even know if you're getting them). There was a market opportunity here (healthier food without the artificial fats) that nobody filled fast enough, and so the law moved out in front of the market.

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