Risky Business: Can Oyster Farmers Defend Themselves against Foodborne Illness–Related Demand Shocks?

Abstract

This study focuses on market risks oyster farmers face when a Vibrio outbreak occurs from a neighboring farm and investigates the effectiveness of a potential marketing strategy. We conducted an auction field experiment where participants bid on entrées of raw oysters and raw clams over six rounds with two information interventions a press article reporting Vibrio outbreak (negative) and a description of local oyster farmers’ effort in outbreak prevention (positive). We found that negative information given first significantly reduced willingness to pay (WTP) for oysters, but subsequent positive information restored WTP. Negative information given as second treatment showed no impact, suggesting positive information’s shielding effect. For clams we found evidence of negative information spillover and red-flag effect of positive information. These suggest that oyster farmers could mitigate oyster’s demand shocks by disseminating their safe handling practices to consumers, however some caution is warranted for its impact on other shellfish demand.