Supermarkets Price Competition in Dallas - Fort Worth Fluid Milk Market

Demand and Price Analysis,

Duopoly Competition in Supermarket Industry: The Case of Seattle-Tacoma Milk Market

The Seattle-Tacoma consumers have been paying higher prices for fresh milk than consumers in other Western states of United States. For instance, the retail price for whole milk averaged $3.27/gallon during the period of April 1999- April 2003 in Seattle-Tacoma, while it did not go beyond$2.86/gallon in most of the large metropolitan areas in Western U.S, during the same period (Carman and Sexton, 2006). In addition, retail prices in Seattle-Tacoma do not respond similarly to farm price increases and decreases. Supermarkets are prompt to pass on to consumers any increase in farm price, while they do not pass or lag behind when farm price decreases. The present study attempts to analyze the pricing conduct of supermarket chains in a duopoly setting using a structural model of consumers and firms behavior. In this paper, we examine the pricing conduct of two supermarket chains using retail supermarket-level data on sales and prices from Seattle-Tacoma market area.Agribusiness, Demand and Price Analysis,

Dynamics of Price-Cost Margins in the U.S. Meat Industry

This study analyses the stochastic behavior of price-cost margins (PCMs) in the U.S. meat industry. It, first, develops and estimates a vertical relationship economic model to derive PCMs in the U.S. meat industry (Beef, Pork, and Poultry). Second it analyzes the behavior of PCMs by decomposing them into their seasonal, cyclical, and trend components using the state-space and the Kalman filtering methods. Price-cost margins in the U.S. meat industry are governed by two common trends and two common cycles. The study also found cyclical variability of PCMs is the highest with chicken, secular variability of PCMs is the highest with pork, while seasonal variability of PCMs is the highest with beef.Price-cost margins, market channel, meat industry, state-space Kalman filter, Demand and Price Analysis, Livestock Production/Industries,

Analyzing the Impact of Food Safety Information on Food Demand in China

This study analyzed the impact of food safety information on food demand in urban China. The LA/AIDS model was estimated by using national province level food consumption data and quantities of articles about food safety event on public media from 2000 to 2008. The results of the study show that urban Chinese consumer food demand was influenced by food safety information from daily newspapers and GM labeling policy. This paper also indicates food price elasticities, expenditure elasticities by categories and the effect of food safety information.food safety, food demand, Linear Approximated Almost Ideal Demand System( LA/AIDS), Genetically modified( GM), food consumption, price elasticity, expenditure elasticity, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, D12, Q11,

RETAIL OLIGOPOLY POWER AND FLUID MILK PRICES IN BOSTON

This paper assesses the independent and joint impacts of oligopoly power of market intermediaries and the Northeast Dairy Compact (NEDC) on fluid milk prices in Boston. Empirical results reveal that price increases due to oligopoly power far outweighed those caused by the NEDC by more than 10 times. In fact, markups are estimated at approximately 33% of the retail milk price, translating into approximately $1/gallon overcharge at 2002 milk prices averaging around$3/gallon.Demand and Price Analysis,

RETAIL OLIGOPOLY POWER, DAIRY COMPACT, AND BOSTON MILK PRICES

This paper assesses the impacts of the Northeast Dairy Compact (NEDC) and retail oligopoly power on fluid milk prices in Boston. Empirical results reveal that price increases due to oligopoly power outweighed those caused by the NEDC by nearly seven times. In fact, markups are estimated at approximately 25% of the retail milk price, translating into approximately a little less than $0.75/gallon. We also estimated that only around two-thirds of the raw milk price changes were passed forward to consumers. This helps explain why consumer prices have come down only little after elimination of the NEDC. In fact, the new milk income loss contract program, which basically provides partial price subsidies to farmers, has contributed to low raw milk prices that have generated substantial benefits to milk processors and retailers, modest benefits to farmers and consumers, all at the expense of taxpayers.Industrial Organization, Livestock Production/Industries,

A Supermarket-Level Analysis of Demand for Breakfast Cereals: A Random Coefficients Approach

This paper applies the BLP approach to the demand for ready-to-eat cereals (RTECs) at the supermarket-chain level in Boston using IRI monthly data. The Random Coefficient Model is used to estimate the demand for 37 brands of RTECs at the leading supermarkets in the Boston area. The empirical results provide a wealth of consumer behavior information, including own- and cross-price elasticites for 37 brands of RTECs at four leading supermarkets in Boston. The demand for RTECs is generally price elastic (ranging between -3 and -8). Consumers respond positively and strongly to promotion, negatively and strongly to price, calories and fiber, and weakly to sugar content. Income has a strong interactive effect with product characteristics and thus is a useful variable for market segmentation. In comparison, the results with the more commonly used Logit model indicate significantly lower price elasticities, provide a limited window on consumer behavior, and yield predicted brand and supermarket market shares that are quite divergent from observed values.Demand and Price Analysis,

An Evaluation of the Soda Tax with Multivariate Nonparametric Regressions

This research extends past work by Shonkwiler and Yen (1999) by allowing for distributional flexibility and nonlinear responses in the form of established semiparametric and nonparametric regressions. The proposed models are shown to outperform the parametric version typically used in demand analysis to characterize a system of censored equations in terms of model fit and prediction power. Using the developed models, we derive elasticities associated with different individual-specific scenarios with regard to the recently proposed “penny-an-ounce” tax on soft drinks sweetened with sugar.censoring, health taxes, nonparametric regressions, Research Methods/ Statistical Methods,

Consumer Heterogeneity: Does It Affect Policy Responses to the Obesity Epidemic?

The fight against obesity in the U.S. has become a priority area for policy makers due to the additional health risks and health care costs. In developing policy to lower obesity rates, it is important to accurately characterize the impact that exercise, smoking and demographic characteristics have on BMI in order to draft effective policy. This analysis uses data from the Behavioral Risk Factor Surveillance System (BRFS) to evaluate the relationship between behavioral and demographic factors with BMI while explicitly accounting for individual heterogeneity by using a quantile analysis. Results suggest that the effect of exercise, smoking, occupation and race vary by BMI quantile, indicating that consumers should be treated as heterogeneous at least for these factors in obesity policy and related analyses.Obesity, Quantile Regression, Heterogeneity, Policy, Food Consumption/Nutrition/Food Safety, I18,

Analyzing the Determinants of Technical Efficiency Among Traditional Dairy Farms in Wisconsin: A Quantile Regression Approach

This study analyzes the determinants of TE among traditional dairy farms in the State of Wisconsin taking into account dairy farms’ heterogeneity. To do so, we first estimate a production frontier and the level of TE using the SPF framework. Then we analyze the determinants of TI using a quantile regression analysis. The results indicate that the determinants of TE affect in very specific ways farmers with different levels of TE. This result confirms our hypothesis on the importance of controlling for farm heterogeneity when analyzing the determinants of TE. This issue is also important from an empirical point of view. Policy makers could improve the effectiveness of their work by targeting specific agricultural services and aid designed for farmers with different level of TE.technical efficiency, dairy, quantile regression, Agribusiness, Agricultural and Food Policy, Marketing, Production Economics, Productivity Analysis,