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The Effect Of Information On Product Quality: Evidence From Restaurant Hygiene Grade Cards

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Author Info
Ginger Zhe Jin
Phillip Leslie
Abstract

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. © 2001 the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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Publisher Info
Article provided by MIT Press in its journal The Quarterly Journal of Economics.

Volume (Year): 118 (2003)
Issue (Month): 2 (May)
Pages: 409-451
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Handle: RePEc:tpr:qjecon:v:118:y:2003:i:2:p:409-451

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  1. Bergen, Mark & Levy, Daniel & Ray, Sourav & Rubin, Paul & Zeliger, Ben, 2006. "When Little Things Mean a Lot: On the Inefficiency of Item Pricing Laws," MPRA Paper 1158, University Library of Munich, Germany. [Downloadable!]
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  2. Matthew J. Neidell, 2008. "Information, Avoidance Behavior, and Health: The Effect of Ozone on Asthma Hospitalizations," NBER Working Papers 14209, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Rick Harbaugh & John W. Maxwell & Beatrice Roussillon, 2006. "The Groucho Effect of Uncertain Standards," Working Papers 2006-09, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy. [Downloadable!]
  4. W. Bentley MacLeod, 2006. "Reputations, relationships and the enforcement of incomplete contracts," Discussion Papers 0506-23, Columbia University, Department of Economics. [Downloadable!]
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  5. Junmin Wan, 2004. "Responses of Consumers to the Mandatory Disclosure of Information: Evidence from Natural Experiments in Japanese Inter-brand Cigarette Demands," Discussion Papers in Economics and Business 04-13-Rev, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP), revised Feb 2006. [Downloadable!]
  6. Steven Y. Wu & Brian E. Roe, 2007. "Discretionary Latitude and Relational Contracting," IZA Discussion Papers 2879, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Joshua Graff Zivin & Matthew Neidell, 2008. "Days of Haze: Environmental Information Disclosure and Intertemporal Avoidance Behavior," NBER Working Papers 14271, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Clerides, Sofronis & Nearchou, Paris & Pashardes, Panos, 2005. "Intermediaries as Bundlers, Traders and Quality Assessors: The Case of UK Tour Operators," CEPR Discussion Papers 5038, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  9. Ginger Zhe Jin & Andrew Kato & John A. List, 2006. "That's News to Me! Information Revelation in Professional Certification Markets," NBER Working Papers 12390, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Xavier Gabaix & David Laibson, 2005. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," NBER Working Papers 11755, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Sumit Agarwal & John C. Driscoll & Xavier Gabaix & David Laibson, 2008. "Learning in the Credit Card Market," NBER Working Papers 13822, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Magali Delmas & Maria Montes-Sancho & Jay P. Shimshack, 2007. "Information Disclosure Policies: Evidence from the Electricity Industry," Discussion Papers Series, Department of Economics, Tufts University 0707, Department of Economics, Tufts University. [Downloadable!]
  13. Omer Moav & Zvika Neeman, 2004. "Inspection in Markets for Experience Goods," Discussion Paper Series dp349, Center for Rationality and Interactive Decision Theory, Hebrew University, Jerusalem. [Downloadable!]
  14. V. Joseph Hotz & Mo Xiao, 2006. "Strategic Information Disclosure: The Case of Multi-Attribute Products with Heterogeneous Consumers," NBER Working Papers 11937, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Leemore Dafny & David Dranove, 2005. "Do Report Cards Tell Consumers Anything They Don't Already Know? The Case of Medicare HMOs," NBER Working Papers 11420, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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