Analysis on the economic effect of the egg grading system

Sang Gon Jeon; Gwangsik Oh; Sounghun Kim

doi:10.7744/kjoas.530312

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2026 Vol.53, Issue 3 Preview Page

Management & Economics

Analysis on the economic effect of the egg grading system

1 September 2026. pp. 445-457

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Abstract

In Korea, eggs serve as a critical source of daily protein. However, the egg industry has long faced market inefficiencies due to a lack of quality evaluation standards and reliance on post-settlement price discovery mechanisms. To address these issues, the government implemented the egg grading system. This study quantitatively evaluates the economic welfare impacts of introducing the egg grading system using an equilibrium displacement model (EDM), a comparative static analysis framework. Annual time-series data from 2005 to 2023 were utilized to estimate the price elasticities of egg demand and supply via regression analysis, yielding an inelastic price elasticity of demand (𝜂 = -0.222) and price elasticity of supply (𝜀 = 0.210). Market shifts were modeled by incorporating an estimated 1.74% increase in consumer willingness-to-pay resulting from enhanced quality information trust, alongside a 0.20% increase in distribution costs incurred by grading operations. The empirical results reveal that the introduction of the egg grading system generates a total annual social welfare gain of approximately 79.7 billion KRW, consisting of a 44.9 billion KRW increase in consumer surplus and a 34.8 billion KRW increase in producer surplus. These findings demonstrate that despite modest cost increases, the economic benefits stemming from improved consumer trust and market efficiency significantly outweigh the implementation costs, providing robust empirical justification for the mandatory expansion of the egg grading system.

Keywords

comparative static analysis

egg grading system

equilibrium displacement model (EDM)

References

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Information

Publisher :Institute of Agricultural Science, Chungnam National University
Publisher(Ko) :충남대학교 농업과학연구소
Journal Title :Korean Journal of Agricultural Science
Journal Title(Ko) :농업과학연구
Volume : 53
No :3
Pages :445-457
Received Date : 2026-08-05
Revised Date : 2026-08-14
Accepted Date : 2026-08-21
DOI :https://doi.org/10.7744/kjoas.530312

Korean Journal of Agricultural Science ISSN:2466-2402(Print) 2466-2410(Online) 농업과학연구

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