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This study analyzes the impact of the 2017 egg contamination incident in South Korea on consumers’ welfare. We estimate two types of single equation demand systems for eggs, and those equations incorporate consumers' subjective perception of eggs’ quality. The estimation is based on a survey on agri-food expenditure designed and implemented by the Rural Development Administration, and the aggregated household data from the survey are used to represent national price and consumption of eggs as well as agri-food expenditure. Our results show that the total consumer welfare loss was 811.8~854.9 billion won, and the cost caused by ignorance about the incident accounted for 12.0~12.9% (102.7~104.9 billion won) of the total loss. These results suggest that dissemination of accurate information and prompt action after a contamination incident along with efforts to secure safety of goods' quality are important in order to alleviate consumers' welfare loss. |
