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Benefit evaluation of the country of origin labeling in Taiwan: Results from an auction experiment

  • Chern, Wen S.
  • Chang, Chun-Yu
Registered author(s):

    This research is aimed at investigating the consumer’s preference for food produced in Taiwan and the economic benefits for the country of origin labeling (COOL). The study used Vickrey second-price sealed-bid auction to elicit the consumer’s willingness to pay (WTP) for products under COOL. The study compared the bid functions estimated with Tobit model and the premium functions estimated with ordinary least squares (OLS). Due to price affiliation, it is more reliable to use the estimated premium functions. The estimated premiums are 67.5%, 84.7% and 99% for Taiwan products over their alternatives of China olives, China oolong tea, and Vietnam oolong tea, respectively. The study concludes that enacting and rigorously enforcing a COOL law would increase economic benefits to consumers in Taiwan, and at the same time, placing the imported products in the leveled playing field.

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    Article provided by Elsevier in its journal Food Policy.

    Volume (Year): 37 (2012)
    Issue (Month): 5 ()
    Pages: 511-519

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    Handle: RePEc:eee:jfpoli:v:37:y:2012:i:5:p:511-519
    Contact details of provider: Web page: http://www.elsevier.com/locate/foodpol

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    1. Loureiro, Maria L. & Umberger, Wendy J., 2007. "A choice experiment model for beef: What US consumer responses tell us about relative preferences for food safety, country-of-origin labeling and traceability," Food Policy, Elsevier, vol. 32(4), pages 496-514, August.
    2. Jay R. Corrigan & Matthew C. Rousu, 2006. "Posted Prices and Bid Affiliation: Evidence from Experimental Auctions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 1078-1090.
    3. Jones, Keithly G. & Somwaru, Agapi & Whitaker, James B., 2009. "Country of Origin Labeling: Evaluating the Impacts on U.S. and World Markets," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 38(3), December.
    4. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, 03.
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    6. 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.
    7. John A. List & Jason F. Shogren, 1999. "Price Information and Bidding Behavior in Repeated Second-Price Auctions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 942-949.
    8. Jeffrey M. Wooldridge, 2001. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262232197, June.
    9. Hanemann, W Michael, 1991. "Willingness to Pay and Willingness to Accept: How Much Can They Differ?," American Economic Review, American Economic Association, vol. 81(3), pages 635-47, June.
    10. Frode Alfnes & Kyrre Rickertsen, 2003. "European Consumers' Willingness to Pay for U.S. Beef in Experimental Auction Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 396-405.
    11. Lusk, Jayson L. & Anderson, John D., 2004. "Effects of Country-of-Origin Labeling on Meat Producers and Consumers," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(02), August.
    12. Loureiro, Maria L. & Umberger, Wendy J., 2003. "Estimating Consumer Willingness to Pay for Country-of-Origin Labeling," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(02), August.
    13. Umberger, Wendy J. & Feuz, Dillon M. & Calkins, Chris R. & Sitz, Bethany M., 2003. "Country-Of-Origin Labeling Of Beef Products: U.S. Consumers' Perceptions," Journal of Food Distribution Research, Food Distribution Research Society, vol. 34(03), November.
    14. Elizabeth Hoffman & Dale J. Menkhaus & Dipankar Chakravarti & Ray A. Field & Glen D. Whipple, 1993. "Using Laboratory Experimental Auctions in Marketing Research: A Case Study of New Packaging for Fresh Beef," Marketing Science, INFORMS, vol. 12(3), pages 318-338.
    15. Johnecheck, Wendy A. & Wilde, Parke E. & Caswell, Julie A., 2010. "Market and Welfare Impacts of COOL on the U.S.-Mexican Tomato Trade," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(3), December.
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