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Measuring the Impact of the BP Deepwater Horizon Oil Spill on Consumer Behavior: Evidence from a Natural Experiment

Listed author(s):
  • O. Ashton Morgan
  • John C. Whitehead
  • William L. Huth
  • Gregory S. Martin
  • Richard Sjolander

A natural experiment setting is exploited to develop a unique dataset of oyster consumer actual and anticipated behavior immediately prior to and following the BP Deepwater Horizon oil spill. Using data from a repeat sample of oyster consumers, a pre and post-spill revealed and stated preference model allows both a short and longer-term response to the spill to be investigated. Findings indicate that, as expected, the BP spill had a negative impact on oyster demand in terms of short-run actual behavior, although spill effects show signs of dissipating several months following the spill. However, by accounting for unobserved heterogeneity in the sample, findings further indicate that short and longer-term spill responses differ across consumer groups. For the larger consumer groups, the negative spill effects continue over the longer-term horizon, while other groups are either non-responsive or increase consumption following news of the spill. Key Words: Consumer behavior, BP oil spill, revealed and stated preference, latent class analysis

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File URL: http://econ.appstate.edu/RePEc/pdf/wp1311.pdf
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Paper provided by Department of Economics, Appalachian State University in its series Working Papers with number 13-11.

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Date of creation: 2013
Handle: RePEc:apl:wpaper:13-11
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Web page: http://economics.appstate.edu/

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  1. Parsons, George R. & Morgan, Ash & Whitehead, John C. & Haab, Timothy C., 2006. "The Welfare Effects of Pfiesteria-Related Fish Kills: A Contingent Behavior Analysis of Seafood Consumers," Agricultural and Resource Economics Review, Cambridge University Press, vol. 35(02), pages 348-356, October.
  2. Morgan, O. Ashton & Martin, Gregory S. & Huth, William L., 2009. "Oyster Demand Adjustments to Counter-Information and Source Treatments in Response to Vibrio vulnificus," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 41(03), pages 683-696, December.
  3. O. Ashton Morgan & Gregory S. Martin & William L. Huth, 2009. "Oyster Demand Adjustments to Counter-Information and Source Treatments in Response to Vibrio vulnificus," Working Papers 09-08, Department of Economics, Appalachian State University.
  4. 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.
  5. Nancy E. Bockstael & Ivar E. Strand, Jr., 1987. "The Effect of Common Sources of Regression Error on Benefit Estimates," Land Economics, University of Wisconsin Press, vol. 63(1), pages 11-20.
  6. Riccardo Scarpa & Mara Thiene & Tiziano Tempesta, 2007. "Latent class count models of total visitation demand: days out hiking in the eastern Alps," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(4), pages 447-460, December.
  7. Morgan, O. Ashton & Martin, Gregory S. & Huth, William L., 2009. "Oyster Demand Adjustments to Counter-Information and Source Treatments in Response to Vibrio vulnificus," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(03), December.
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