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Sales Loss Determination in Food Contamination Incidents: An Application to Milk Bans in Hawaii

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  • Mark E. Smith
  • Eileen O. van Ravenswaay
  • Stanley R. Thompson

Abstract

This article presents a procedure for estimating sales loss following a food contamination incident with application to the case of heptachlor contamination of fresh fluid milk in Oahu, Hawaii, in 1982. A major finding is that media coverage following the incident had a significant impact on milk purchases and that negative coverage had a larger effect than positive coverage. This conclusion implies that public statements by producers or government to assure the public of safe food supplies may be ineffective in restoring consumer confidence following the discovery of a food safety problem.

Suggested Citation

  • Mark E. Smith & Eileen O. van Ravenswaay & Stanley R. Thompson, 1988. "Sales Loss Determination in Food Contamination Incidents: An Application to Milk Bans in Hawaii," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(3), pages 513-520.
    • Handle: RePEc:oup:ajagec:v:70:y:1988:i:3:p:513-520.
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    1. Joseph D. Brown, 1969. "Effect of a Health Hazard "Scare" on Consumer Demand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 51(3), pages 676-678.
    2. David G. Swartz & Ivar E. Strand, Jr., 1981. "Avoidance Costs Associated with Imperfect Information: The Case of Kepone," Land Economics, University of Wisconsin Press, vol. 57(2), pages 139-150.
    3. James G. MacKinnon, 1983. "Model Specification Tests Against Non-Nested Alternatives," Working Paper 573, Economics Department, Queen's University.
    4. Robert N. Shulstad & Herbert H. Stoevener, 1978. "The Effects of Mercury Contamination in Pheasants on the Value of Pheasant Hunting in Oregon," Land Economics, University of Wisconsin Press, vol. 54(1), pages 39-49.
    5. Hamilton, James L, 1972. "The Demand for Cigarettes: Advertising, the Health Scare, and the Cigarette Advertising Ban," The Review of Economics and Statistics, MIT Press, vol. 54(4), pages 401-411, November.
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