How Do Consumers React To A Product Harm Crisis?

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When it is highly publicized that a product is defective, contaminated or harmful, this is known as a product harm crisis. In this video HELENA PERRONE explores how consumers react to such an event. Focusing on the French “mad cow” crisis which began in 2000 and combining a theoretical model with a comprehensive dataset, Perrone finds that small drops in sales in response to such a crisis can conceal consumers’ real feelings about a product. Demonstrating that the substitutability of a product plays a key role, Perrone suggests ways in which both firms and governments can respond more effectively.

DOI:

https://doi.org/10.21036/LTPUB101023

Tags:

Consumer Behavior

Product Harm Crisis

Researcher

Helena Perrone is an Assistant Professor in the Department of Economics at the University of Mannheim. Among other responsibilities, she is on the steering committee of the Association of Competition Economics and a research affiliate of the CEPR. Having completed her PhD at Toulouse School of Economics, Perrone has previously held positions at the Barcelona Graduate School of Economics and at Pompeu Fabra University. Her main research interests include empirical industrial organization, quantitative marketing and applied microeconomics. Perrone has been principal investigator on several projects that have been funded by organizations including the German Science Foundation and the Economic and Social Research Council.

Institution

University of Mannheim (Universität Mannheim)

For generations, the University of Mannheim has been preparing students to take on leadership roles in business, academia, and society. One of the university’s strengths in this task is its profile, which is characterized by the economic and social sciences. It is in these fields that the University of Mannheim has repeatedly been ranked as one of the top 20 European research institutions. Key focuses of Mannheim researchers include decision-making processes and elections, governance, regulation, competition and innovation, migration and multilingualism, and the culture of change. The campus surrounding Mannheim’s baroque palace is a place where bright minds from across the globe come together to learn, discuss, research, and prepare to make their mark on the world.

The Collaborative Research Center (CRC) TR 224 – EPoS

The Collaborative Research Center (CRC) TR 224 – EPoS is a cooperation between the University of Bonn and the University of Mannheim. Funded by the German Research Foundation (DFG), it aims to analyze and provide policy proposals that address three key societal challenges: how to promote equality of opportunity; how to regulate markets in light of the internationalization and digitalization of economic activity; and how to safeguard the stability of the financial system.

Original publication

Consumers’ costly responses to product-harm crises

Ferrer Rosa and Perrone Helena

Published in 2022

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