Does Country-of-Origin Marketing Matter?

49 Pages Posted: 24 Oct 2019 Last revised: 6 Dec 2019

See all articles by Xinyao Kong

Xinyao Kong

University of Chicago - Booth School of Business

Anita Rao

University of Chicago - Booth School of Business

Date Written: October 11, 2019

Abstract

Firms often display product information on their front-of-package labels, with some firms going as far as to make deceptive claims. We study the impact of the “Made in USA” claim - a disclosure not legally required on consumer-packaged goods and yet a claim highlighted by many firms, sometimes deceptively, - on consumer demand. Leveraging the FTC’s investigation of four brands that resulted in removal of the claim from product packages, we study the impact such removal had on sales. We find a decline in demand following the removal of the “Made in USA” claim. Second, to ensure complete exogeneous variation, we conduct a field experiment on eBay, where we run over 900 auctions, varying only whether or not a product contains this country-of-origin information. We find consumers are willing to pay 28% more for the product when marketed as “Made in USA.” The experiments alongside observational data allow us to rationalize firms’ incentives in making deceptive country-of-origin claims.

Suggested Citation

Kong, Xinyao and Rao, Anita, Does Country-of-Origin Marketing Matter? (October 11, 2019). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2019-138. Available at SSRN: https://ssrn.com/abstract=3468543 or http://dx.doi.org/10.2139/ssrn.3468543

Xinyao Kong

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Anita Rao (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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