Home production, market substitutes, and the labor supply of mothers

We study the interaction among the home production of food, the market for industrialized food, and the labor supply of mothers. For this, we introduce a model of child nutrition based on two substitutes. Industrialized food is produced in an imperfectly competitive market where its price, quality, and quantity are endogenously determined. Home-produced food is superior in quality but is time-consuming to make and, thus, entails opportunity costs for mothers. We derive the equilibrium and the socially optimal quality of industrialized food. Finally, we suggest government policies to boost the labor supply of mothers and social welfare, including setting regulatory quality standards and supporting technological changes in the production of industrialized and homemade food.