Consumers' Costly Responses to Product-Harm Crises

• 成果类型: Article
• 署名作者: Ferrer, Rosa; Perrone, Helena
• 署名单位: Pompeu Fabra University; Barcelona School of Economics; University of Mannheim
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.4494
• 发表日期: 2023
• 页码: 2639-2671
• 关键词: Food safety; demand estimation; Scanner data; idiosyncratic utility parameters; nutritional preferences; Heterogeneous consumers

摘要

This paper exploits a major food safety crisis to estimate a full demand model for the unsafe product and its substitutes, recovering consumers' preference parameters for different product characteristics. Counterfactual exercises quantify the relevance of different mechanisms driving consumers' responses, such as changes in safety perceptions, idiosyncratic taste, product characteristics, and price. We find that consumers' reactions are limited by their preferences for the product's observable and unobservable characteristics. Because of the costs associated with switching from the affected product, the decline in demand following a product-harm crisis tends to understate the true weight of such events in consumers' utility. We find that unobservable taste is a crucial driver of consumers' responses. Our counterfactual exercises illustrate that the demand would have declined further if consumers had had access to a closer substitute. For an accurate assessment of product-harm crises, managerial strategies should therefore account for how different demand drivers bind consumers' substitution patterns.