Neill, Clinton L.

By: Neill, Clinton L. ; Chen, Susan E.
Consumer reactions to food scares and subsequent recalls are dependent on both the event and on the intensity of media coverage surrounding the food scare. A lengthy or intense media response to a food scare could lead to significant reductions in demand, lower prices, and decreased short-run profit. We examine the effect of recent recalls of shell eggs on shell egg prices. Using weekly data, we analyze the effect of recall duration and media coverage on egg prices. We allow for nonlinear changes at the time of specific egg scares and account for media coverage about each scare to parse the relative impact of media on egg recalls.