Impact of disjunctive marking on consumer preferences

Abstract

Disjunctive marking (‘or’ or ‘and/or’) has been ruled illegal under the U.S. Customs and Border Protection’s country-of-origin labelling regulations. Using an ongoing dispute in Puerto Rico as a medium, data was collected through a choice experiment and a random parameter logit model was employed to estimate the impact of disjunctive marking on consumers’ willingness-to-pay and market shares. We find that disjunctive marking provides Rico branded rice a $0.28 premium per three-pound bag of medium-grain rice. Additionally, 23% of the Puerto Rican rice market is being reallocated to Rico through the use of disjunctive marking. This study is the first attempt at estimating the economic impacts of disjunctive marking and provides insights on an innovative mislabelling technique that impacts consumer preferences.