Impact of Transboundary Air Pollution on Service Quality and Consumer Satisfaction

45 Pages Posted: 26 Jun 2018 Last revised: 19 Oct 2021

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Long Wang

Fudan University - School of Economics

Zoe Yang

The Chinese University of Hong Kong - CUHK Business School

Multiple version iconThere are 2 versions of this paper

Date Written: October 6, 2019

Abstract

This paper exploits random and exogenous transboundary haze pollution in Singapore caused by forest fires in Indonesia to examine the causal effects of air pollution on firm productivity and consumer satisfaction. To measure firm productivity in the private sector, we use the subcategory review scores on service quality, and to estimate consumer satisfaction we use the individual-level overall online review scores. We find that a significant reduction in consumer satisfaction related to increases in haze pollutant intensity is followed by a substantial rebound in consumer satisfaction for eight months after the haze completely dissipates. We also employ sentiment analysis to illuminate review data and to uncover the underlying mechanisms, namely: the decreased consumer satisfaction during the haze shock is caused by changing consumer mood, rather than by decreases in service quality; after the haze dissipates, consumer satisfaction is quickly restored and soon exceeds the previous level due to substantial improvements in service quality.

Keywords: Air Pollution, Service Quality, Customer Review, Machine Learning

JEL Classification: C8, D2, L2, L8

Suggested Citation

Agarwal, Sumit and Wang, Long and Yang, Yang, Impact of Transboundary Air Pollution on Service Quality and Consumer Satisfaction (October 6, 2019). Journal of Economic Behavior and Organization, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3189351 or http://dx.doi.org/10.2139/ssrn.3189351

Sumit Agarwal

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

Long Wang

Fudan University - School of Economics ( email )

600 Guoquan Road
Yangpu
Shanghai, Shanghai 200433
China

HOME PAGE: http://https://wanglong1988.weebly.com/

Yang Yang (Contact Author)

The Chinese University of Hong Kong - CUHK Business School ( email )

7/F, Cheng Yu Tung Building
12 Chak Cheung Street, Hong Kong
Hong Kong
Hong Kong

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