Hedonic Analysis of Retail Egg Prices Using Store Scanner Data: An Application to the Korean Egg Market
The objective of this study is to identify product characteristics that affect retail prices of fresh eggs. The study develops a hedonic price model to estimate implicit prices of product attributes of Korean fresh eggs. Then, the estimated shadow prices of attributes are used to identify a preference ranking of different levels of the same attribute and the relative importance of the attributes. The study uses store-level scanner data which include prices, sales quantities, and product attributes for all egg transactions for an entire one-year period. Unlike many earlier hedonic price models, the model developed in this study considers the potential effect of quantity sold in estimating implicit prices of attributes. Results suggest that sales quantity is one of important variables in hedonic price models, and therefore omitting the quantity variable could lead to a biased result, particularly when prices and sales vary widely across observations. Results also indicate that Korean consumers put a significantly high value on fertile, organic, free-range-feeding, and larger sized eggs, plus smaller package sizes. The findings could help both producers and retailers formulate better production and marketing strategies by focusing on these attributes.
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