Market Response to a Food Safety Shock: The 2006 Foodborne Illness Outbreak of E. coli O157:H7 Linked to Spinach
In 2006 FDA announced that consumers should not eat fresh spinach in the wake of a large foodborne illness outbreak of E. coli O157:H7. This paper investigates response of consumers to the announcement. We use an AIDS demand model with 5 food safety shock variables and retail scanner data to analyze market response. Even fifteen months after the outbreak, predicted sales of spinach in bags were still down 10 percent from what they would have been in the absense of the food safety shock. After the outbreak, consumers shifted to other leafy greens such as bulk iceberg lettuce, other bulk lettuce, and bagged salads without spinach.
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- Richards, Timothy J. & Patterson, Paul M., 1999. "The Economic Value Of Public Relations Expenditures: Food Safety And The Strawberry Case," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(02), December.
- Arnade, Carlos Anthony & Pick, Daniel, 1998.
"Seasonality and unit roots: the demand for fruits,"
Agricultural Economics of Agricultural Economists,
International Association of Agricultural Economists, vol. 18(1), January.
- Kuchler, Fred & Tegene, Abebayehu, 2006. "Did Bse Announcements Reduce Beef Purchases?," Economic Research Report 7251, United States Department of Agriculture, Economic Research Service.
- Calvin, Linda, 2007. "Outbreak Linked to Spinach Forces Reassessment of Food Safety Practices," Amber Waves, United States Department of Agriculture, Economic Research Service, June.
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