Baby Milk Formula Scandal and Food Safety in China

China has a relatively short history of consuming dairy products. Although a large differential exists between China's per capita consumption of dairy products and average consumption in the rest of the world, China's consumption of dairy products have significantly increased in recent years. The infant milk formula scandal in 2008 raised more and more attention on the food safety issue in China. This issue is not only significant for developing countries such as China, but also vital for developed countries. A consumer survey was conducted in Beijing and the results indicate that people prefer imported infant formula over. The survey also suggests that the Sanlu infant formula scandal in 2008 continued to sway people's preferences, even four years afterwards. The regression model estimated in this thesis reveals that the infant formula scandal had a large impact on the price gap between domestic and imported milk powder.