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Consumer preferences for differentiated food products

Dissertation
Author: Vugar Ahmadov
Abstract:
A significant characteristic of most markets is that the commodity being exchanged is differentiated. A differentiated commodity is one where consumers distinguish among its components or attributes. In general, products are differentiated in two dimensions, one being the dimension of varietal (or horizontal) differentiation and the other being a dimension of quality (or vertical) differentiation. The dissertation consists of three manuscripts, studying consumers' preferences for differentiated products. First manuscript provides theoretical evidence on heterogeneity of consumers' preferences for vertically differentiated products. Second manuscript investigates consumers' perception of quality and safety on product evaluation. Third manuscript studies consumers' preferences for cold smoked salmon attributes using a conjoint choice experiment. In first manuscript, the effects of differences in quality perception arising from exogenous technology preferences on firm's profits in domestic and foreign markets were analyzed using one-shot three stage game theoretic approach. Two-country game theoretic model allows only one domestic and foreign firm to exist in both markets. Due to exogenous preferences for technologies used by domestic firms in respective markets, consumers perceive foreign firm's products relatively lower than domestic firm's products. To gain a market share, foreign firm sets its price lower than price of domestic firm's products upon export. Differences in quality perception of physically same product across two markets encourage domestic firms to produce relatively low quality for foreign markets or offer the product with technology preferred in foreign market. In second manuscript, the effects of country of origin, home and foreign region of origins on consumers' perceptions of food safety, quality and willingness to buy were examined. The findings suggest that consumers' perception of food quality and likelihood of purchasing food product is affected by product origin cues through perception of food safety. Estimated results demonstrate that consumers evaluate and perceive food attributes more favorably if they have opportunity to taste its sample. Product sampling significantly improved consumers' perception, especially if food is low priced. In third manuscript, a conjoint based choice experiment was conducted to elicit consumer preferences for cold smoked salmon attributes. Product attributes include (1) production method (two levels - wild versus farmed), (2) origin of salmon (four levels - two country of origin - USA and Canada) and two region of origin - Alaska and British Columbia), and (3) price (three levels - premium, high and low). Consumers' preferences for product attributes were estimated using random parameters logit model to overcome the problem of irrelevant independence of alternatives. The results suggest that consumer preferences are positively affected if the origin of product is identified with Alaska and British Columbia. The estimations show consumer preferences for wild smoked salmon over farmed smoked salmon. The study computes the trade-offs between attribute levels showing that consumers are willing to pay premium for wild smoked salmon, and smoked salmon from Alaska but want discount for British Columbia compared to Canada.

viii TABLE OF CONTENTS

Page ACKNOWLEDGMENTS………………………………………………………

iii ABSTRACT…………………………………………………………………….

v TABLE OF CONTENTS……………………………………………………….

viii LIST OF TABLES………………………………………………………………

x LIST OF FIGURES……………………………………………………………..

xi DEDICATION…………………………………………………………………..

xii CHAPTER 1. INTRODUCTION………………………………………………

References………………………………………………………..

1 5 CHAPTER 2. ASSYMETRYC QUALITY PERCEPTION ARISING FROM EXOGENOUS TECHNOLOGY PREFERENCES IN VERTICALLY DIFFERENTIATED MARKETS 6 Introduction………………………………………………………… 7 Theoretical Model…………………………………………….……. 14 Game Structure……………………..……………………………… 17 Betrand Nash Equilibrium in Prices………………………..……… 20 Choice of Quality Levels and Quality Equilibrium…………...……. 28 Entry……………………………………………..…………...…….. 33 Conclusions……………………………………..…………...……… 37 References………………………………………………………….. 39

CHAPTER 3. CUE UTILIZATION IN EVALUATING SAFETY AND QUALITY OF FOOD PRODUCTS: EMPIRICAL EVIDENCE

41 Introduction……………………………………………………….. 42 Conceptual Framework…………………………………………… 44

ix Research Methods…………………………………………………… 53 Main Experiment……………………………………………….. 54 Results………………………………………………………….. 57 Results for Mediation Analysis…………………………………. 60 Hypothesis Testing.……………………………………………... 62 Discussion and Conclusions.………………………………………. 65 References………………………………………………………….. 68

CHAPTER 4. CONSUMERS’ PREFERENCES FOR SMOKED SALMON: CONJOINT BASED EMPIRICAL EVIDENCE……………….. 95 Introduction…….………………………………………………….. 96 Theoretical Framework…………………………………………….. 100 Empirical Framework ……………………………………………… 104 Conjoint Based Experiment ………………………………………... 107 Experiment Design and Data Description..………………………… 108 Conclusions…………………………………………………………. 113 References…………………………………………………………... 117 ANNEX I QUESTIONNAIRE ON SHOPPING FOR COLD SMOKED SALMON - NON-PRODUCT SAMPLING……………………….. 127 ANNEX II QUESTIONNAIRE ON SHOPPING FOR COLD SMOKED SALMON - PRODUCT SAMPLING………………………………

130 ANNEX III QUESTIONNAIRE FOR COLD SMOKED SALMON CHOICE BASED CONJOINT EXPERIMENT …………………………… 133 ANNEX IV QUESTIONNAIRE FOR GENERAL INFORMATION ON RESPONDENT ………………………………………………….. 136

x LIST OF TABLES

Table Page 1.1 Four Control Conditions and Twelve Experimental Treatments…………… 81 1.2 List of Estimated Models…………………………………………………… 82 1.3 Continued List of Estimated Models……………………………………….. 83 1.4 Two-Way ANOVA (Mediation Analysis I).………………………………... 84 1.5 OLS Estimations (Mediation Analysis II)………….……………………… 85 1.6 Two-Way ANOVA for Perceived Safety …………………………………...

86 1.7 Two-Way ANOVA for Perceived Quality…………………………………

87 1.8 Two-Way ANOVA for Perceived Safety (Product Sampling)……….…….. 91 1.9 Three -Way ANOVA for Perceived Safety………………………………….92 2.1 Selected Levels and Attributes Used in Conjoint Based Choice…………… 120 2.2 Twenty-Four Profiles with Six Choice Sets in CBCE Design……………… 121 2.3 An Example of Choice Set in CBCE……………………………………….. 122 2.4 Individual Characteristics of Survey Respondents…………………………. 123 2.5 Estimated Results for Random Parameters……………………….………… 124 2.6 Estimated Parameters for Base Model with Income and Price Interaction……………………………………………………………………

125 2.7 Trade-Offs in Conjoint Choice Based Experiment…………………………. 126

xi

LIST OF FIGURES

Figures Page 1.1 Conceptual Framework..…………………………………………………… 80 1.2 Estimated Perceived Food Safety (Alaska).………………….…………….

87 1.3 Estimated Perceived Food Safety (USA).…………………………………. 88 1.4 Estimated Perceived Food Safety (British Columbia)………...…….……… 89 1.5 Estimated Perceived Food Safety in Sampling Condition………………….. 93 1.6 Estimated Perceived Food Safety in Sampling Condition…………………..

94

xii

Dedication

To my wife and lovely children:

Shahla Ahmadova

Leyla Ahmadova

Rashid Ahmadov

1 CHAPTER ONE INTRODUCTION The wide array of differentiated products in the marketplace is a response to a growing diversity of consumer tastes involving two taste levels. The first taste diversity is when individuals prefer to consume different products on different occasions, expressing a preference for variety over location and time (e.g., eating a different meal at different restaurant or same restaurant every evening). The second taste diversity is when individuals have some idiosyncratic tastes about their most preferred variants (e.g., choosing the same brand for a specific product). Consumers with idiosyncratic preferences are prepared to pay more for variants that are better suited to their own tastes (Anderson et al. 1992). Idiosyncratic preferences are also explained by consumers’ perception of certain product related attributes (e.g., production method – organic versus whole or brand). Heterogeneity of consumers’ tastes arising from various factors encourages firms to sell differentiated products in the marketplace. Firms introduce new production methods and techniques to offer products with different attributes to satisfy diverse tastes of consumers. The main objective of this dissertation is to provide theoretical and empirical evidence on consumers’ preferences for differentiated markets. The first manuscript analyzes effects of differences in quality perception arising from exogenous technology preferences on firm’s profits in domestic and foreign markets using one-shot three stage game theoretic approach. Differences in consumers’ perception of product attributes might be the main reason for different perception of an identical product to exist (Temblay and Polasky, 2002). Product attributes driving consumers’ heterogeneous quality perceptions could be physical (e.g., color, taste) or non-physical (e.g., production technology, brand and price) attributes (Brunkart, 1978; Bredahl, 2003). In first manuscript, two-country game

2 theoretic model allows only one domestic and foreign firm to exist in both markets. Each firm produces a product with a single quality attribute. Due to exogenous preferences for technologies used by domestic firms in respective markets, consumers perceive products made by foreign technology relatively lower than made by domestic technology. Upon entry to export market, foreign firm’s products are perceived lower quality relative to products made by domestically known technology. Differences in quality perception of an identical product across two markets leads to subjective vertical product differentiation, which reduces foreign firm’s profit in foreign market compared to domestic market. The results suggest that if the technology used by foreign firm is symmetrically promoted in both of export markets upon entry, products of foreign firms could face symmetric quality perception in both markets. Domestic firm needs to supply a high quality food product in the domestic market, but relatively lower quality food products to the foreign market by setting up two production lines in the plant. Finally, findings show that appropriate label matching quality level of the product is preferred since it presents actual quality. In addition to quality perception of food products (Bredahl et al. 1998; Bredahl, 2003), another important construct in the product evaluation is the food safety perception. Consumers may not enjoy utility of any food product if they do not perceive the food to be safe for consumption. There is a limited research conducted to examine the role of food safety perception in addition to food quality perception in evaluating food products or making food choices. Understanding the importance of food safety perception construct in product evaluations, the present research studies the effects of country of origin and region of origin on consumers’ perceptions of food quality and willingness to buy through food safety perceptions.

3 Findings of the second manuscript show that consumers’ food safety perceptions explain the relationship between country of origin and region of origin and food quality. But food quality perceptions do not explain the relationship between food safety perception and willingness to buy. The latter result suggests that consumers’ food safety perceptions have a direct impact on their likelihood of purchasing food products. Results of the second manuscript demonstrate that product sampling and price levels have significant interaction effects with different levels of product origin. Finally, the study reports three way interaction effect of price, product sampling and product origin cues revealing a number of perspectives for further research. Consumers’ preferences for different attributes of food products also lead to the differentiation of food products. In general, consumers make trade-off between those attributes upon choosing the most preferred product. Third manuscript in the dissertation analyzes consumers’ preferences for cold smoked salmon attributes using conjoint based choice experiment. Three attributes of cold smoked salmon: production method, product origin and price, were used to create twenty-four smoked salmon alternatives. Analysis of consumers’ shopping behavior for cold smoked salmon reveals that consumers’ preferences are positively affected if the origin of product is identified with Alaska but negatively affected if the origin of product is USA. In addition, the results suggest that consumers prefer cold wild smoked salmon over cold farmed smoked salmon. Computations of the trade-offs between attribute levels indicate consumers’ willingness to pay premium if product is wild smoked and caught in Alaska but want discount for product identified with British Columbia. The results provide a number of interesting implications for fishery industry such as (a) to promote cold smoked salmon products with region of origin such as Alaska and British Columbia, and (b) to use wild caught salmon in making cold smoked salmon product.

4 Three studies in dissertation contribute to a growing literature on consumers’ preferences for differentiated products and perception of food safety and quality, providing insights into market segmentation and competition of differentiated products. Theoretical and empirical evidence from three manuscripts suggest that a long-term research plan is needed to investigate factors affecting consumers’ preferences for different product attributes.

5

REFERENCES Anderson, S. P., André, P., and Thisse, J. F. (1992). “Discrete Choice Theory of Product Differentiation.” The MIT Press Cambridge, Massachusetts, London, England. Bredahl, L. (2003). “Cue utilization and quality perception with regard to branded beef.” Food Quality and Preference, 15, 65-75. Bredahl L., Grunert K. G., and Fertin C. (1998). “Retailing consumer perceptions of pork quality to physical product characteristics.” Food Quality & Preference, 9, 273-281. Burnkart, R. E. (1978). “Cue Utilization in Product Perception.” Advances in Consumer Research. 5(1): 724-729. Jaskold G. J., and Thisse, J. F. (1979). “Price Competition, Quality and Income Disparities.” Journal of Economic Theory, 20, 340-359. Jaskold G. J., and Thisse, J.F. (1980). “Product Differentiation with Income Disparities: An Illustrative Model.” The Journal of Industrial Organization, 31, 115-129. Tremblay, V. J., and Stephen, P., (2002). “Advertising with Subjective Horizontal and Vertical Product Differentiation.” Review of Industrial Organization. 20(3), 253-265.

6

CHAPTER TWO

ASSYMETRYC QUALITY PERCEPTION ARISING FROM EXOGENOUS TECHNOLOGY PREFERENCES IN VERTICALLY DIFFERENTIATED MARKETS

Summary The study analyses effects of differences in quality perception arising from exogenous technology preferences on firm’s profits in domestic and foreign markets using one-shot three stage game theoretic approach. In addition to entering domestic market, domestic firm also decides to export their products to foreign market. Two-country game theoretic model allows only one domestic and foreign firm to exist in both markets. Due to exogenous preferences for technologies used by domestic firms in respective markets, consumers perceive foreign firm’s products relatively lower than domestic firm’s products. To overcome pre-emptying market problem, foreign firm sets its price lower than price of domestic firm’s products upon export. Differences in quality perception of physically same product across two markets encourage domestic firms to produce relatively low quality for foreign markets. Results also suggest that if the technology used by foreign firm is symmetrically promoted in both of export markets before the entry, products of foreign firm could face symmetric quality perception in domestic and foreign markets.

Key words: Vertical quality differentiation, Stackelberg game, Bertrand-Nash equilibrium,

7

Introduction

A significant body of literature investigates the issues related to vertical product differentiation, and therefore, the focus of those studies is centered on studying the conditions under which firms select product varieties or variants and compete with one another through their strategic actions e.g. pricing and quality choices. The previous literature defines vertical product differentiation as a phenomenon that allows all consumers to rank the variants of a product. If product variants differ in quality, everyone agree that higher quality is preferable (Tirole 1988). If product variants are assumed to be ‘vertically’ differentiated, and the products are offered at the same price, and all consumers choose to purchase the same product, which is of highest quality (Shaked and Sutton, 1982, 1983). The main assumptions in models of vertical product differentiation are that (a) consumers differ in their incomes or willingness to pay (or reservation prices) for quality improvement, and (b) products will sell at different prices with the higher quality products being sold at a premium over the price of rival, lower quality products (Gabszewics and Thisse, 1979; Boom 1995). Gabszewicz and Thisse (1979) analyze the vertical product differentiation model in the oligopoly framework demonstrating the competition of two firms with different quality levels on the supply side. On the demand side, Gabszewicz and Thisse (1979) show that there exists a group of consumers who (a) are willing to purchase only high quality at high price or only low quality at low price, (b) are indifferent between purchasing high quality at high price and low quality at low price, (c) are not able to purchase either of qualities by suggesting assuming that consumers are heterogeneous only in their income levels.

8 In addition to the previous work of Gabszewicz and Thisse (1979), who define price endogenously in the second stage of the game by assuming exogenous quality choices in the first stage of the game, Sutton and Shaked (1982) develop one shot three stage game theoretic approach in which a number of firms choose firstly, whether to entry an industry or a market, secondly, the endogenous quality level of their respective products, and thirdly, endogenously their prices. They define a duopoly market by deriving from the income dispersion of consumers, an upper bound to the number (only two) of firms that enjoy positive market shares with the choice of distinct quality levels, at positive prices (production costs being assumed zero). Their intuition behind the latter result is that as the quality choices become close, the price competition between the increasingly similar products reduces the profit of both firms. Additionally, they show if three or more firms are present in the market, it is possible that the competition in choice of quality drives all firms to set the same ‘top’ level of quality, while prices and profits become zero. The latter condition depends on the fact that none of those three firms will now prefer to set its quality lower than that of its two rivals since the reduction of quality level certainly earns zero revenue at equilibrium. Finally, they conclude that the competition between the surviving ‘high quality’ products drives respective prices down to such a point at which even poorest refrain themselves from purchasing low quality products at zero prices. The unique nature of the quality and price competition in vertical product differentiation model does not allow a large number of firms in the market or industry to increase indefinitely as the fixed costs associated with entry decline or even the size of the economy expands. Chamberlinian approach to monopolistically competitive market supports the existence of an arbitrarily large number of firms with a positive market share and a price sufficiently greater than the unit variable cost of a respective product, firms’ quality choices

9 are more closely spaced, which derives price to approach an equality level with unit variable costs (Chamberlin, 1950). Shaked and Sutton (1983) derive necessary and sufficient conditions for ‘finiteness property’ or a finite number of firms to exit in the industry where the quality improvement takes the form of R & D or other forms of fixed costs. On the other hand, the unit variable costs may increase slowly with an increase in quality or may slowly fall through an innovation process. The finiteness property leads to the formation of a ‘natural oligopoly’ in the vertical product differentiation framework. Even though Shaked and Sutton (1983) suggest that the industry still might allow an arbitrarily large number of firms that sell an identical product at a price level equal to unit variable cost. Their main conclusion is that there exists a bound on the number of firms offering a range of higher and distinct qualities of products at price levels greater than unit variable cost. Note that small but still strictly positive fixed costs upon entering the industry excludes firms pricing their products equal to unit variable costs from the market. Shaked and Sutton (1987) brings another significant contribution to the literature of vertical product differentiation focusing on the issues of effects of fixed costs with regard to their size and substitution for unit variable costs to improve quality of products. They successfully demonstrate that the influence of any fixed costs in the vertical product differentiation framework is not associated with the size of the fixed costs but with the extent to which these fixed costs substitute for higher variable cost in the quality improvement (whether real or perceived) of the product. They derive conditions showing that interplay between the technology used to produce certain quality levels and consumers’ tastes simultaneously determine the level of fixed costs undertaken by the firm and the degree of industry concentration.

10 The influence of fixed versus variable costs have been addressed by other authors from the different angle in the vertical product differentiation framework where Lehmann- Grube (1997) suggests that the advantage of quality leadership may be a stable result if the firms do not change their quality during the price stage of the game. He brings an interesting perspective to the vertical differentiation literature by showing that it is difficult for firms to commit themselves to a certain quality level if the costs of quality are variable. Lehmann- Grube (1997) shows that the most natural commitment to a certain quality level is a sunk cost associated with quality choice at the early stages of the game. But Gal-Or (1987) introduces conditions when the choice of quality is an irreversible decision, firms usually tend to produce more similar products than when the choice is not irreversible. He suggests that the decreased differentiation will lead to the reduction of the quality range available to the consumers that reduces social welfare. In addition to the quality and price competition in the vertical product differentiation framework, Gal-Or (1983) introduces an oligopoly model where both the quantity and the quality of products are endogenously determined by each firm. He also demonstrates that if consumers are uniformly distributed, the additional entry of firms reduces an average quality and may reduce welfare. In addition, he shows that the entry of many firms in the market leads to the failure of the symmetric equilibria. Motta (1993) introduces the conditions under which the product differentiation always arises at equilibrium when firms differentiate their products more under price rather than under quantity competition. He also suggests that firms face fierce price competition at the last stage of the game, which forces firms to choose more differentiated products under Bertrand than Cournot competition. His findings are consistent with Bertrand’s (1883) objections on the theoretical framework of Cournot (1838)

11 by mostly arguing that firms are competing in strategic variables such as price not in quantities. The literature suggesting the endogenous choice of quality levels (Shaked and Sutton, 1982) introduces bounded quality space with lower and upper limits. Ronnen (1991) demonstrates that if the minimum quality standard is chosen appropriately, none of the consumers will drop out of the market, and some of non consumers will join the market. In a real market situation, consumers will raise their quality selection, even though their selection of the quality exceeds the quality standard in the absence of regulation. The consumer’ choice of a higher quality urges low quality firms to set their quality greater than minimum quality standards mandated by the government. In 1991, Ronnen proposed that high-quality sellers raise their quality level in reply to the low-quality sellers that raised their quality to the mandated minimum quality level. Note that the nature of minimum quality standards limits the quality range in which producers can differentiate qualities. Boom (1995) measures the effects of differing national minimum quality standards on the price equilibria and the quality choices of a vertically differentiated duopoly. She proposes that if one of the two countries demand a marginally higher minimum quality standard and both firms still decide on entering two country markets, the qualities of both firms will be higher, their prices will be lower, and their market shares will be the same as in the case of an identical and lower minimum quality standard in the two countries. Finally, she shows that each consumer in both country markets gains from a higher minimum quality standard in at least one country if both firms still decide to enter the markets. By expanding on the previous literature, Xavier (1996) introduces the quality game by allowing for either covered or uncovered market outcomes where he shows the endogenous market outcomes of equilibrium quality choice at the price stage. In his

12 theoretical framework, the equilibrium in the quality game yields a corner solution in the price game. Additionally, he drives the conditions how to maintain the principle of maximal differentiation by demonstrating the quality choice dominated solutions that generate a corner solution in the price game. Finally, he suggests that the distribution of consumers’ tastes is the crucial factor in the markets, and difference of quality levels do not depend on the population characteristics. His intuition is that the differences of quality levels will be negatively related to the population dispersion. Note that the degree of heterogeneity in the population places an upper bound to the extent of product differentiation. One of the interesting perspectives offered to the previous literature on the minimum quality standard in the vertical product differentiation belongs to Lutz et al. (2000) who present a model in which firms make quality improvements to reduce the impacts of forthcoming regulatory standards. Authors suggest that those quality improvements increase profits but reduce total social welfare, and this finding is strictly dependent on the assumptions of the model such as upward-sloping reaction functions and an influential quality leader. Note that the latter two assumptions are very consistent with the assumptions made by Boom (1995) but the actual finding is not consistent with the work of Ecchia and Lambertini (1997) who present a model of duopoly where firms with incentives for quality improvements produce only one variety and production involves variable costs convex in quality and an exogenous fixed cost. In their approach, they set the endogenous minimum quality standard aiming at maximizing social welfare. However, Lutz et al. (2000) propose that the minimum quality standard decreases the degree of product differentiation in the market, reduces the market share of the high quality firm to the advantage of the low quality firm, and increases social welfare in such a way that the gains for the low quality firm and low income consumers are greater than the losses suffered by the high quality firm and high

13 income consumers. This finding is very consistent with the findings of Ronnen (1991) and Crampes and Hollander (1995) who also proposed that minimum quality requirements in a duopoly market where firms’ unit costs are increasing in quality results in increasing the profits of the lower quality firm. Crampes and Hollander (1995) also show that high-quality producer will not raise the quality as the result of mandated quality imposition since the cost of quality contains a large component, which is sunk implying that the marginal cost of the quality at the level chosen by the firm exceeds the marginal cost at the same quality level for a new firm. One of the new research streams emerging in the literature of the vertical product differentiation is the vertical difference in the consumer perception of product quality. Tremblay and Polasky (2002) demonstrate that consumer may perceive the quality of products vertically different even when the physical qualities of product are identical due to the influence of the advertising. They assume the product brand as the quality indicator under the advertising, and if the product brand is more advertised than the other brand, over advertised brand may be perceived vertically high quality than under-advertised. Their approach suggests that advertising generates subjective vertical perception of quality in the market. Our current research expands the theoretical framework developed by Tremblay and Polasky (2002) with regard to the subjective quality perception of competing brands into two-country model by suggesting that exogenous technology preferences generate subjective perception of product quality, which differs across two markets. We assume that consumers in this model differ in willingness to pay for perceived quality of product but the size of consumer population is symmetric across two markets. Note that the product is the same (consumers of both market have demand for i.e., meat product) except its quality is vertically

Full document contains 152 pages
Abstract: A significant characteristic of most markets is that the commodity being exchanged is differentiated. A differentiated commodity is one where consumers distinguish among its components or attributes. In general, products are differentiated in two dimensions, one being the dimension of varietal (or horizontal) differentiation and the other being a dimension of quality (or vertical) differentiation. The dissertation consists of three manuscripts, studying consumers' preferences for differentiated products. First manuscript provides theoretical evidence on heterogeneity of consumers' preferences for vertically differentiated products. Second manuscript investigates consumers' perception of quality and safety on product evaluation. Third manuscript studies consumers' preferences for cold smoked salmon attributes using a conjoint choice experiment. In first manuscript, the effects of differences in quality perception arising from exogenous technology preferences on firm's profits in domestic and foreign markets were analyzed using one-shot three stage game theoretic approach. Two-country game theoretic model allows only one domestic and foreign firm to exist in both markets. Due to exogenous preferences for technologies used by domestic firms in respective markets, consumers perceive foreign firm's products relatively lower than domestic firm's products. To gain a market share, foreign firm sets its price lower than price of domestic firm's products upon export. Differences in quality perception of physically same product across two markets encourage domestic firms to produce relatively low quality for foreign markets or offer the product with technology preferred in foreign market. In second manuscript, the effects of country of origin, home and foreign region of origins on consumers' perceptions of food safety, quality and willingness to buy were examined. The findings suggest that consumers' perception of food quality and likelihood of purchasing food product is affected by product origin cues through perception of food safety. Estimated results demonstrate that consumers evaluate and perceive food attributes more favorably if they have opportunity to taste its sample. Product sampling significantly improved consumers' perception, especially if food is low priced. In third manuscript, a conjoint based choice experiment was conducted to elicit consumer preferences for cold smoked salmon attributes. Product attributes include (1) production method (two levels - wild versus farmed), (2) origin of salmon (four levels - two country of origin - USA and Canada) and two region of origin - Alaska and British Columbia), and (3) price (three levels - premium, high and low). Consumers' preferences for product attributes were estimated using random parameters logit model to overcome the problem of irrelevant independence of alternatives. The results suggest that consumer preferences are positively affected if the origin of product is identified with Alaska and British Columbia. The estimations show consumer preferences for wild smoked salmon over farmed smoked salmon. The study computes the trade-offs between attribute levels showing that consumers are willing to pay premium for wild smoked salmon, and smoked salmon from Alaska but want discount for British Columbia compared to Canada.