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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 ,
Oral Capps Jr.  and
Victoria Salin
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
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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.

Keywords

food safety2007 Peter Pan recalldemand system modelsscanner data
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 41 , Issue 3 , December 2012 , pp. 327 - 339
Copyright
Copyright © 2012 Northeastern Agricultural and Resource Economics Association 

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