Examining the Effect of Food Recalls on Demand: The Case of Ground Beef in the U.S.
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Using Nielson retail scanner dataset and applying difference-in-difference approach and synthetic control method, we test whether consumers in Utah reduced beef purchases after 2009 Salmonella outbreak of ground beef products. The result of DID approach indicates that the Salmonella event reduced ground beef purchases in Utah by 17% in four weeks after the recall. Price elasticity of demand is also estimated to be -2.04; therefore, the reduction in ground beef purchases as a result of recall is comparable to almost 8.3% increase in the price of this product. Using the synthetic control method that allows us to use all of the control states to produce synthetic Utah, we found the effect of this event very small.