Abstract

The implementation of government policy can have an influence on market environment and market prices of pork in consequence. In South Korea, consumers prefer high-fat pork cuts due to the prevalence of roosting pork over a hot grill. This paper examines the impact of the government policy which aims to increase the consumption of low-fat pork cuts because of the concerns regarding asymmetric consumption between high-fat and low-fat pork cuts. Using hedonic price methods combined with quasi-experimental approaches we estimate the subsequent impact of food policy on the price of low-fat pork cuts using a time series of sales data. This study utilized an effective approach which has been widely employed for policy evaluation to produce plausible estimates of the economic values generated by the government policy. We find the existence of market segmentation and different impacts of the policy between markets. While the market price for high-fat pork cuts has remained stable, the price for low-fat pork cuts has slightly increased since the policy has been implemented. This paper illustrates that government’s policy can be a good strategy to maintain sustainability of the food industry by improving the balance in pork consumption and the management of stocks.

Highlights

  • As the economy grows and households’ incomes increase, the meat consumption in South Korea has steadily increased

  • The coefficient on the single DD variable indicates the % change in sales prices of low-fat pork cuts due to the government policy. Since this coefficient is positive and statistically significant we find evidence that the policy implementation had a positive and significant impact on the sales prices of low-fat pork cuts sold in Seoul

  • The treatment × policy variable which indicates the sales prices of low-fat pork cuts sold in Seoul, Incheon and Gyeonggi-do after the implementation of the policy, describes the difference in the mean sales prices compared to the base category

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Summary

Introduction

As the economy grows and households’ incomes increase, the meat consumption in South Korea has steadily increased. Korea Pork Producer Association continuously performs several events such as discount event and free sampling event at various stores as well as releasing advertising campaign via media source to promote sales of low-fat cuts These institutions have advertised several times a healthy diet of low-fat cuts to change consumers’ awareness. We estimate economic impact of the food policy associated with encouraging consumption of low-fat pork using hedonic price methods. Sustainability 2018, 10, 892 the impact of government policy on change in market prices of pork cuts; (2) This study applies the combination of hedonic price and quasi-experimental methods, which can be regarded as an effective approach to explore credible estimates of the monetary values generated by the government policy.

Review of Related Literature
Theoretical Basis of Hedonic Price Method
Empirical Model Specifications
Difference-in-Difference Estimation
Difference-in-Difference-in-Difference Estimation
Results and Discussion
Economic Effect of the Government Policy
Verification of Modeling Approach
Conclusions
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