Structure Demand Estimation of the Response to Food Safety Regulations in the Japanese Poultry Market

Since their implementation in 1995, the Agreements on the Application of Sanitary and Phytosanitary Measures and Technical Barriers to Trade of the World Trade Organization have played an increasingly important role in the conduct of international negotiations. This study employs the method of moments estimator proposed by Berry, Levinsohn, and Pakes (1995) and Nevo (2001) to estimate the effect of Japanese pesticide residue standards on poultry consumption with a particular focus on the maximum residue limits (MRLs) on pesticide and veterinary drugs. The results confirm that more stringent MRLs on pesticide and veterinary drugs enhance the demand for poultry imports by ensuring higher food safety. The results shed light on Japanese consumers’robust preference for food safety. Further counterfactual experiments of alternative MRLs show that the demand-enhancing effect may vary among the exporting countries, and appears to be more prominent for imported poultry from developed countries.