A market failure exists where the free-market equilibrium quantity of output is greater or less than the
socially optimal level of output. The free market will produce either too much or too little of a good.
Childhood obesity is epidemic world- wide, and is expected to increase the rates of many chronic
diseases. Increasing physical activity and improving nutrition are keys to obesity prevention and control.
But changing individual behavior is difficult. A comprehensive, coordinated strategy is needed. Policy
interventions that make healthy dietary and activity choices easier are likely to achieve the greatest
benefits. There is emerging evidence on how to address childhood obesity, but we must take action now
to begin to reverse the epidemic. If we focus upon the UK, the government is following these
comprehensive methods in order to reduce the chances of chronic diseases (reduce child obesity)-
The first method that the UK government is trying to adopt is to use the concept of corrective taxes on
fast food. This will cause the price of fast food to rise and hence would lead to a decrease in the quantity
demanded. This is shown below through the diagram-
Here we see the Market for Unhealthy Food
We see that at the initial price the quantity demanded was Q e .The initial demand curve represented the
Marginal Prive Benefit (MPB) which is the increase in benefit obtained from consumption or production
of one additional unit received by the entity consuming or producing the product and the initial supply
curve represented the Marginal Social Cost (MSC) which is the total cost society pays for the production
of another unit or for taking further action in the economy. But taking into consideration the health
problems caused by the consumption of this unhealthy food, the govt. may choose to impose taxes
upon these products in order to increase the cost and reduce the demand, as seen in the diagram we
see that when the tax is imposed then the supply curve shifts to the left showing a decrease, same for
the demand curve which also shifts to the left and hence represents the Social benefit, which is the total
benefit to society from producing or consuming a good/service. Here as we decrease the demand this
will still be a benefit to the society as it will decrease the consumption of unhealthy food. Overall, the
tax reduces the supply of the good causing equilibrium price to rise and quantity demanded to fall.
The second method that the government tends to use is regulations and banning. The UK government
has announced that it would prohibit child advertising of junk food. The Committee of Advertising
Practice (CAP) will ban ads promoting high fat, salt or sugar food and drink to under-16s across online
and social media, print and cinema, in a move designed to tackle the U.K.’s increasing obesity problems.
The UK government's ban on junk food ads before the 9pm watershed will stop 160,000 children
becoming overweight or obese, according to experts. Children would avoid eating about nine calories a
day on average, which would reduce childhood obesity figures by nearly 5 per cent, they claim. The
government also launched a consultation over a total ban on junk food advertising online. The
Conservative government had announced plans to halve childhood obesity by 2030, detailed in its 'plan
for action' document, back in 2018. This comprehensive reform also aims to reduce the country obesity
levels and also the consumption of junk food especially among the minors and the teenage. The
government aims to reduce the equilibrium quantity to a more of a socially optimal level.
The third method used by the government is to reduce the price of healthy food by giving subsidies,
reduced price will lead a rise in the quantity demanded of healthy food. This incidence of subsidy is
represented by the diagram below-
The diagram above depicts the market for healthy products
Here we see that at the initial price the quantity demanded was Q 1 but when the government
introduced a subsidy, then we see a rise in the quantity demanded of healthy food as the price fell. The
initial supply curve represented the Marginal Private Cost (MPC) which is the change in the producer's
total cost brought about by the production of an additional unit of a good or service. While the initial
demand curve represents both the MSB and MPB. But as the government introduced a comprehensive
reform to use method of subsidy, the supply curve shifted to the right representing an increase in the
supply of healthy food, also representing a rise in demand. The S2 here represents the MSC which we
had explained before.
These comprehensive reforms ranging from corrective taxes, banning and regulations to subsidy is what
the UK government is focusing upon, in order to reduce the consumption of unhealthy/ junk food in
their country, hence decreasing the obesity levels especially among the youngsters.