Essays on Food Demand and Food Retail Competition in Local Markets
2018-07
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Essays on Food Demand and Food Retail Competition in Local Markets
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2018-07
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Consumers become more health-conscious and have higher and more diverse expectations for food quality, ranging from food taste and nutrition features to the characteristics of food production, processing, and marketing. In response, large numbers of new products are introduced and a wide range of changes have occurred in food and agricultural markets. Accordingly, this dissertation comprises three essays investigating questions relevant to these changes and providing implications for food policy and retailing. The first essay focuses on the increasing popularity of the “New Super Grain”—Ethiopian teff. Specifically, we examine Ethiopian consumers’ welfare losses due to increasing teff prices and evaluate the effectiveness of alternative food aid policies in alleviating these losses. Using data from two waves of Ethiopia Socioeconomic Survey 2013-2014 and 2015-2016, we estimate a two-stage demand system and document the consumption patterns of cereals in Ethiopia. We find that teff is the most own-price inelastic grain in the cereal market and a one percent increase in teff prices leads to a decrease of 0.38 percent in total consumer welfare. Subsequently, our results suggest wheat aid is an effective policy in reducing the impacts of increasing teff prices, which lends support to the ongoing Ethiopian policy that distributes subsidized wheat on a large scale. The second essay focuses on the introduction of new demand-enhancing agricultural products. Specifically, we evaluate the welfare impacts of the introduction of Honeycrisp apples. We estimate structural models of consumer demand and retailer competition using store scanner data covering 61 cities across the United States during the period from March 2009 to February 2015. The results show that, on average, the introduction of Honeycrisp apples increases consumer welfare by 3.14 cents per pound, of which 2.98 cents is explained by the increased number of total apple varieties and 0.16 cents by the decline in prices of competing apple varieties. The results also show that the introduction of Honeycrisp apples has increased the total sales quantity by 8.03 percent and the total sales revenue by 21.25 percent over the study period. The third essay examines the food retail competition in local markets by addressing the heterogeneity in households’ choice sets of stores, shopping baskets, and travel distances. A revised mixed logit model is developed to model the household choice of shopping stores that enable us to calculate stores’ price elasticities and recover their gross profit margins under alternative pricing strategies. We construct a dataset for estimation by matching the information in 2016 IRI household and retail scanner datasets. The results show that without considering household travel distance for shopping, we might overestimate stores’ price elasticities and underestimate their gross profit margins. The results also suggest that households prefer to visiting closer stores at expense of paying higher prices for their shopping baskets. Finally, we find that one increase in the number of nearby rivals within 5 kilometers from a store is associated with a decrease of 1.6 to 2.4 percent in the store’s gross profit margin depending on different pricing strategies.
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University of Minnesota Ph.D. dissertation. July 2018. Major: Applied Economics. Advisor: Metin Çakır. 1 computer file (PDF); ix, 153 pages.
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Wang, Yanghao. (2018). Essays on Food Demand and Food Retail Competition in Local Markets. Retrieved from the University Digital Conservancy, https://hdl.handle.net/11299/200221.
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