Did the Proposed Country-of-Origin Law Affect Product Choices? The Case of Salmon

Abstract

The 2002 Farm Securit and Rural Investment Act mandated that country-of-origin labeling (COOL) be applied to specific food commodities. Using revealed preference data for 1998–2006, a nonlinear AIDS model is used to estimate the demand for uncooked frozen, uncooked fresh, and precooked salmon to assess the impact of the legislation on consumer demand patterns. Findings from a non parametric analysis suggest a possible rotation in the demand curve for fresh salmon that may be linked with the quality signal associated with COOL. However, our findings indicate that COOL had no significant impact on overall consumer demand for the three products. All three were found to be inelastic, with uncooked fresh salmon being slightly more price sensitive than uncooked frozen and precooked salmon. Given the expenditure elasticities, the fresh salmon segment of the industry appear to be more vibrant than the other salmon segments and would likely influence investment decisions in the salmon industry.