2003/05/01 by Guangze Jin, G. Z. Jin, P. Leslie +1 · 5 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Consumer Market Behavior and Pricing #Economics of Agriculture and Food Markets #Supply Chain and Inventory Management
paper · doi:10.1162/003355303321675428
This study examines the effect of an increase in product quality information to consumers on firms' choices of product quality. In 1998 Los Angeles County introduced hygiene quality grade cards to be displayed in restaurant windows. We show that the grade cards cause (i) restaurant health inspection scores to increase, (ii) consumer demand to become sensitive to changes in restaurants' hygiene quality, and (iii) the number of foodborne illness hospitalizations to decrease. We also provide evidence that this improvement in health outcomes is not fully explained by consumers substituting from poor hygiene restaurants to good hygiene restaurants. These results imply that the grade cards cause restaurants to make hygiene quality improvements.