Essay About Product Recalls And Product Quality

Literature Review Template
Freedman, Kearney, and Lederman. “Product Recalls, Imperfect Information, and Spillover Effects: Lessons From the Consumer Response to the 2007 Toy Recalls.” Review of Economics & Statistics, 2012.Summary and relevant highlights for retractions transparency projectMotivation/SummaryEffects of providing information about product quality in markets where consumers cannot verify product quality This paper “empirically investigates whether and how information about the quality of one set of products causes consumers to update their expectations about the quality of others.”Relevant citations and Existing TheoryDranove, David, and Ginger Zhe Jin, ‘‘Quality Disclosure and Certification: Theory and Practice,’’ Journal of Economic Literature 48(2010), 935–963.MethodChanges in Toy sales following retraction within-manufacturer and across types of toysData  “In 2007, the Consumer Product Safety Commission (CPSC) issued 212 recalls of toys and other children’s products, as compared to152 such recalls in 2006, 171 in 2005, and 121 in 2004”FindingsRecalls lead to a fall in sales relative to that company’s sales for other types of toysDon’t find evidence of  negative spillovers within-manufacturer to dissimilar toysFind industry-wide spillovers (recalls affect industry of a whole) Other relevant stuffRecall process (pg. 502)Complaint made to CPSC (consumer product safety commission)CPSC launches an investigationIf content of complaint confirmed, agency sends letter to the company initiating recall processFirms must respond within 24 hrsAlmost all recalls are voluntary[not in the paper but found the recall descriptions on the CPSC website: