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Verifying Timing and Frequency of Revealed Preference Violations and Application to the BSE Outbreak in Japan

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  • Hyun J. Jin

Abstract

This paper proposes a method to differentiate a socioeconomic shock from other transitory shocks in the revealed preference test by verifying the timing and frequency of the demand shifts. If frequency of the revealed preference violations is substantially high in a period that is synchronized with the timing of a socioeconomic shock, it suggests that changes in the demand patterns are because of the socioeconomic shock. Specifically, this paper splits the entire sample into several subperiods and compares the expected probability and realized probability of noting observations involved in the shifts. The method is applied to the Japanese and South Korean meat import demand related to the bovine spongiform encephalopathy (BSE) outbreak in Japan. Empirical results show that there are excess violations after September 2001 in the Japanese data but not in the South Korean data, suggesting that the BSE event has influenced Japanese meat import demand, but not South Korean meat import demand. Le présent article propose une méthode pour distinguer un choc socioéconomique d'autres formes de chocs transitoires dans le test des préférences révélées en vérifiant le moment et la fréquence des déplacements de la demande. Si la fréquence des violations de préférences révélées est substantiellement élevée au cours d'une période correspondant à la survenue d'un choc socioéconomique, les changements observés dans les courbes de demande pourraient être liés au choc socioéconomique. Plus particulièrement, nous avons divisé l'échantillon en plusieurs sous‐périodes et avons comparé la probabilité anticipée et la probabilité réalisée d'après les observations notées dans les déplacements. Nous avons appliqué cette méthode à la demande d'importation de viande du Japon et de la Corée du Sud à la suite de la flambée d'ESB au Japon. Les résultats empiriques ont montré de nombreuses violations après septembre 2001 dans les données japonaises, mais non dans les données sud‐coréennes, ce qui porte à croire que l'épisode d'ESB a influencé la demande d'importation de viande du Japon, mais non celle de la Corée du Sud.

Suggested Citation

  • Hyun J. Jin, 2006. "Verifying Timing and Frequency of Revealed Preference Violations and Application to the BSE Outbreak in Japan," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(1), pages 139-157, March.
  • Handle: RePEc:bla:canjag:v:54:y:2006:i:1:p:139-157
    DOI: 10.1111/j.1744-7976.2006.00042.x
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    File URL: https://doi.org/10.1111/j.1744-7976.2006.00042.x
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    1. Peterson, Hikaru Hanawa & Chen, Yun-Ju (Kelly), 2003. "The Impact Of Bse On Japanese Retail Beef Market," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35233, Southern Agricultural Economics Association.
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    Cited by:

    1. Peter Tozer & Thomas L. Marsh, 2012. "Domestic and trade impacts of foot-and-mouth disease on the Australian beef industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(3), pages 385-404, July.
    2. Jin, Hyun Joung, 2008. "Changes in South Korean consumers' preferences for meat," Food Policy, Elsevier, vol. 33(1), pages 74-84, February.

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