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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

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.

Suggested Citation

  • Awada, Lana & Yiannaka, Amalia, 2012. "Consumer perceptions and the effects of country of origin labeling on purchasing decisions and welfare," Food Policy, Elsevier, vol. 37(1), pages 21-30.
  • Handle: RePEc:eee:jfpoli:v:37:y:2012:i:1:p:21-30
    DOI: 10.1016/j.foodpol.2011.10.004
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    Cited by:

    1. Pouliot, Sebastien & Sumner, Daniel A., 2014. "Differential impacts of country of origin labeling: COOL econometric evidence from cattle markets," Food Policy, Elsevier, vol. 49(P1), pages 107-116.
    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.
    3. repec:eee:joreco:v:34:y:2017:i:c:p:145-152 is not listed on IDEAS
    4. Balcombe, Kelvin & Bradley, Dylan & Fraser, Iain & Hussein, Mohamud, 2016. "Consumer preferences regarding country of origin for multiple meat products," Food Policy, Elsevier, vol. 64(C), pages 49-62.
    5. 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.
    6. Glynn T. Tonsor & Ted C. Schroeder & Jayson L. Lusk, 2013. "Consumer Valuation of Alternative Meat Origin Labels," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(3), pages 676-692, September.
    7. Salamon, Petra & Weible, Daniela & Weber, Sascha & Christoph-Schulz, Inken, 2016. "Pros and Cons of Introducing a Mandatory Country of Origin Labelling for Dairy Products in Germany," 2016 International European Forum (151st EAAE Seminar), February 15-19, 2016, Innsbruck-Igls, Austria 244520, International European Forum on System Dynamics and Innovation in Food Networks.

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