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

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  • Bakhtavoryan, Rafael
  • Capps, Oral, Jr.
  • Salin, Victoria

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.

Suggested Citation

  • Bakhtavoryan, Rafael & Capps, Oral, Jr. & Salin, Victoria, 2012. "Impact of Food Contamination on Brands: A Demand Systems Estimation of Peanut Butter," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 41(3), December.
  • Handle: RePEc:ags:arerjl:141695
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    References listed on IDEAS

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    Cited by:

    1. Pozo, Veronica F. & Schroeder, Ted C., 2016. "Evaluating the costs of meat and poultry recalls to food firms using stock returns," Food Policy, Elsevier, vol. 59(C), pages 66-77.
    2. Zarebanadkoki, Samane & Zheng, Yuqing & Woods, Timothy & Buck, Steven, 2016. "Examining the Effect of Food Recalls on Demand: The Case of Ground Beef in the U.S," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236112, Agricultural and Applied Economics Association.
    3. Bakhtavoryan, Rafael & Capps, Oral, Jr. & Salin, Victoria, 2014. "Dynamics of Consumer Response to Food Contamination: The 2007 Peanut Butter Recall," Journal of Food Distribution Research, Food Distribution Research Society, vol. 45(2), July.

    More about this item

    Keywords

    food safety; 2007 Peter Pan recall; demand system models; scanner data; Agribusiness; Consumer/Household Economics; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety; Health Economics and Policy; Marketing;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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