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Consumer perceptions and the effects of country of origin labeling on purchasing decisions and welfare

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  • Awada, Lana
  • Yiannaka, Amalia
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    Abstract

    The study develops a general analytical framework of heterogeneous consumer preferences to examine the effects of country of origin labeling (COOL) regulation on consumer purchasing decisions and welfare. We show that while differences in consumer perceptions about COOL information, namely, whether it is viewed as an attribute that differentiates products vertically or horizontally, do not alter the nature of the market and consumer welfare effects of mandatory COOL, the relative strength of consumer preferences for COOL are shown to be important in determining the magnitude of these effects. In addition, our results show that the benchmark used (a no COOL versus a voluntary COOL regime) is critical in evaluating the effects of the policy. We show that, under both horizontal and vertical product differentiation, a change from a no COOL to a mandatory COOL regime decreases (increases) the welfare of consumers with weak (strong) preference for COOL while a change from a voluntary to a mandatory COOL regime leads to an unambiguous loss in consumer welfare.

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    Bibliographic Info

    Article provided by Elsevier in its journal Food Policy.

    Volume (Year): 37 (2012)
    Issue (Month): 1 ()
    Pages: 21-30

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    Handle: RePEc:eee:jfpoli:v:37:y:2012:i:1:p:21-30

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    Web page: http://www.elsevier.com/locate/foodpol

    Related research

    Keywords: Country of origin labeling; Heterogeneous consumer preferences; Vertical and horizontal product differentiation; Market effects and consumer welfare;

    References

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    1. Brester, Gary W. & Marsh, John M. & Jimmerson, Jason, 2004. "Distributional Impacts of Country-of-Origin Labeling in the U.S. Meat Industry," Agricultural Marketing Policy Center Briefings 29189, Montana State University, Department of Agricultural Economics and Economics.
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    3. Brester, Gary W. & Marsh, John M. & Atwood, Joseph A., 2004. "Distributional Impacts of Country-of-Origin Labeling in the U.S. Meat Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(02), August.
    4. Sterns, James A. & House, Lisa & VanSickle, John J. & Wysocki, Allen F., 2004. "COOL and Consumers' Willingness to Pay in the Fresh Produce Industry - Some Initial Impressions from the Field," Working Papers 15644, University of Florida, International Agricultural Trade and Policy Center.
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    15. Schupp, Alvin R. & Gillespie, Jeffrey M., 2001. "Handler Reactions To Potential Compulsory Country-Of-Origin Labeling Of Fresh Or Frozen Beef," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 33(01), April.
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    Cited by:
    1. Joseph, Siny & Lavoie, Nathalie & Caswell, Julie A., 2014. "Implementing COOL: Comparative welfare effects of different labeling schemes," Food Policy, Elsevier, vol. 44(C), pages 14-25.
    2. Donatella Baiardi & Riccardo Puglisi & Simona Scabrosetti, 2012. "Individual Attitudes on Food Quality and Safety: Empirical Evidence on EU Countries," DEM Working Papers Series 014, University of Pavia, Department of Economics and Management.

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