Abstract/Summary

Little is known about consumer response to food safety recalls in low- and middle- income countries. Using an event-study framework, this paper examines the immediate and long-term changes in noodle purchases after the nationwide removal of Maggi instant noodles from the market in India in 2015. We show that this recall had a negative impact on the purchases of Maggi noodles among urban households for at least two years. This provides evidence of the huge costs of recalls on food producers that can be leveraged by policymakers to promote food safety. We also find strong evidence for a positive spillover effect to non-Maggi noodles that is more persistent among households with more regular purchasing habits of Maggi noodles. This indicates that consumers with more persistent habits of buying a recalled product are less likely to stigmatize alike food products under different brands. Our results are robust to alternative assumptions of pre-trends in purchases and placebo tests.