Do Consumers Respond to Country-of-Origin Labelling?

Abstract

Seafood was the first class of foods to fall under the 2002 US regulatory requirements for mandatory country-of-origin labelling (COOL). If this regulation created benefits for consumers, filling an information void by demanding information that the market did not, then there should have been an observable response in the demand for seafood. To gauge the impact, we examined markets most likely to respond. We estimated retail demand for shrimp, seafood that in the USA is largely sourced from Southeast Asia and has a history of raising food safety concerns. Our estimated demand systems included standard variables consistent with economic theory—price and expenditure changes, ongoing trends, and seasonality in consumption patterns. The demand systems also accounted for regulations that required country-of-origin labels for some, but not all, foods prior to COOL. Data came from a nationally representative panel of households that record retail food purchases, allowing us to construct relatively high-frequency market data suitable for testing for the presence of even short-lived impacts. Household demographic information allowed us to separately estimate demands by consumers most likely to respond to label information. The demand systems yielded reasonable price and expenditure elasticity estimates, but none of the variables related to COOL revealed evidence of an impact.