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Abstract

With the major concern of the COOL policy being the cost incurred by meat producers, retail chain stores, and others within the supply chain, a number of individuals and organizations have formulated estimates of the extra costs and elasticities related to the implementation of COOL. As supporters of the law claim it provides valuable information to consumers, opponents on the other hand suggest its cost far outweighs any possible benefits and poses financial burden on U.S meat producers. This paper estimates the demand for beef associated with the country of origin labeling. A Linear Approximate/Almost Ideal Demand System model is used to demonstrate the supply and demand functions and relationships for beef, pork and chicken. Quantities of beef, pork, and chicken are separately regressed on average quarterly U.S. retail price, in a system of equations setting. Estimated elasticities for beef, pork and chicken were used to calculate the relative changes in price and quantity in response to the COOL-induced supply and demand. Results indicated that, the own-price elasticity of beef is inelastic after the implementation of COOL.

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