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Impact of Food Contamination on Brands: A Demand Systems Estimation of Peanut Butter

Published online by Cambridge University Press:  15 September 2016

Rafael Bakhtavoryan
Affiliation:
Agribusiness, Food, and Consumer Economics Research Center in the Department of Agricultural Economics at Texas A&M University in College Station, Texas
Oral Capps Jr.
Affiliation:
Southwest Dairy Marketing Endowed Chair, also at the Agribusiness, Food, and Consumer Economics Research Center in the Department of Agricultural Economics at Texas A&M University
Victoria Salin
Affiliation:
Agribusiness, Food, and Consumer Economics Research Center in the Department of Agricultural Economics at Texas A&M University

Abstract

A 2007 food-borne illness incident involving peanut butter is linked with structural change in consumer demand. Compensated and uncompensated own- and cross-price elasticities and expenditure elasticities were calculated for leading brands before and after the product recall using the Barten synthetic model and weekly time-series data from 2006 through 2008. Statistically significant differences in price elasticities for the affected brand, Peter Pan, were absent. After a period of 27 weeks, this brand essentially recovered from the food safety crisis. Significant differences in price elasticities were evident among non-affected brands. Hence, spillover effects and heightened competition are associated with the recall.

Type
Contributed Papers
Copyright
Copyright © 2012 Northeastern Agricultural and Resource Economics Association 

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