IDEAS home Printed from https://ideas.repec.org/a/bap/journl/180304.html
   My bibliography  Save this article

Italian Extra-Virgin Olive Oil: Impact on Demand on Being Market Leaders, Private Labels or Small Producers

Author

Listed:
  • Antonio Stasi

    (Department of Sciences of Agriculture, Food and Environment - University of Foggia, ITALY)

  • Francesco Diotallevi

    (Departmentof Agricultural, Foods and Environmental Sciences - University of Perugia, ITALY)

  • Andrea Marchini

    (Departmentof Agricultural, Foods and Environmental Sciences - University of Perugia, ITALY)

  • Gianluca Nardone

    (Department of Sciences of Agriculture, Food and Environment - University of Foggia, ITALY)

Abstract

This paper proposes a quantitative analysis of extra-virgin olive oil¡¯s market designed to study the intra-sector competition and to analyze the profitability of pricing strategies for different types of companies: small producers, large manufacturers and Private Labels. The analysis focuses on trade within the modern grocery sector, which represents the first distribution channel of extra-virgin olive oils at the national level. The study refers to the theory of industrial organization and, through the demand estimation, measures the price-cost margins. The most important results relate to the concerns of the smaller producers¡¯ respect to Private Labels, big and international companies in the event of a further fall of extra-virgin olive oil¡¯s prices. Implications address policy makers to strengthen product differentiation policies coupled to collective branding, and give further support to vertical integration and cooperation.

Suggested Citation

  • Antonio Stasi & Francesco Diotallevi & Andrea Marchini & Gianluca Nardone, 2018. "Italian Extra-Virgin Olive Oil: Impact on Demand on Being Market Leaders, Private Labels or Small Producers," Review of Economics & Finance, Better Advances Press, Canada, vol. 13, pages 39-54, August.
    • Handle: RePEc:bap:journl:180304
    as

    Download full text from publisher

    File URL: http://www.bapress.ca/ref/ref-article/1923-7529-2018-03-39-16.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Johan F.M. Swinnen, 2010. "The Political Economy of Agricultural and Food Policies: Recent Contributions, New Insights, and Areas for Further Research," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(1), pages 33-58.
    2. Hausman, Jerry A & Leonard, Gregory K, 2002. "The Competitive Effects of a New Product Introduction: A Case Study," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 237-263, September.
    3. Dios-Palomares, Rafaela & Martínez-Paz, José M., 2011. "Technical, quality and environmental efficiency of the olive oil industry," Food Policy, Elsevier, vol. 36(4), pages 526-534, August.
    4. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    5. Aviv Nevo, 2003. "New Products, Quality Changes, and Welfare Measures Computed from Estimated Demand Systems," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 266-275, May.
    6. Pierani, P & Rizzi, P L, 1991. "An Econometric Analysis of the Olive Oil Market in Italy," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 18(1), pages 37-60.
    7. Bo Xiong & Daniel Sumner & William Matthews, 2014. "A new market for an old food: the U.S. demand for olive oil," Agricultural Economics, International Association of Agricultural Economists, vol. 45(S1), pages 107-118, November.
    8. Moschini, Giancarlo, 1999. "Imposing Local Curvature Conditions in Flexible Demand Systems," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(4), pages 487-490, October.
    9. Friedeberg, Alfred S., 1989. "Protectionist re-balancing or market-oriented reform? : EC oils and fats policy," Food Policy, Elsevier, vol. 14(4), pages 301-307, November.
    10. Bonanno, Alessandro, 2009. "Some like it healthy: demand for functional products in the Italian yogurt market," 113th Seminar, September 3-6, 2009, Chania, Crete, Greece 57985, European Association of Agricultural Economists.
    11. Gracia, Azucena & de Magistris, Tiziana, 2008. "The demand for organic foods in the South of Italy: A discrete choice model," Food Policy, Elsevier, vol. 33(5), pages 386-396, October.
    12. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762.
    13. Di Vita, Giuseppe & D'Amico, Mario & La Via, Giovanni & Caniglia, Elena, 2013. "Quality Perception of PDO extra-virgin Olive Oil: Which attributes most influence Italian consumers?," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 14(2), pages 1-13.
    14. Umberto Medicamento & Bernardo De Gennaro & Arturo Casieri, 2013. "La competitivit? del settore dell?olio di oliva attraverso l?analisi del network degli scambi commerciali internazionali," Economia agro-alimentare, FrancoAngeli Editore, vol. 15(1), pages 103-122.
    15. Marchini, Andrea & Diotallevi, Francesco & Fioriti, Linda, 2011. "The analysis of competitive interdependencies through “Social Network Analysis”: the case study of extra-virgin olive oil," MPRA Paper 41468, University Library of Munich, Germany, revised 2011.
    16. Maria Luz Loureiro & Jill J. McCluskey, 2000. "Assessing consumer response to protected geographical identification labeling," Agribusiness, John Wiley & Sons, Ltd., vol. 16(3), pages 309-320.
    17. Giancarlo Moschini, 1995. "Units of Measurement and the Stone Index in Demand System Estimation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 63-68.
    18. Anania, Giovanni & Pupo D'Andrea, Maria Rosaria, 2008. "The Global Market for Olive Oil: Actors, Trends, Policies, Prospects and Research Needs," Working Papers 6109, TRADEAG - Agricultural Trade Agreements.
    19. Friedeberg, Alfred S., 1983. "Olive oil in the EC : Gift from the gods or Trojan Horse," Food Policy, Elsevier, vol. 8(1), pages 13-22, February.
    20. Jerry A Hausman & Gregory K Leonard, 2002. "The Competitive Effects of a New Product Introduction: A Case Study," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 237-263, September.
    21. Jon H. Hanf & Rainer Kühl, 2005. "Branding and its consequences for German agribusiness," Agribusiness, John Wiley & Sons, Ltd., vol. 21(2), pages 177-189.
    22. Francesco Diotallevi & Chiara Paffarini & Andrea Marchini, 2014. "Guardare per comprare: il visual marketing per la progettazione e valutazione del display distributivo. Il caso studio dello scaffale oli nella Gdo," Micro & Macro Marketing, Società editrice il Mulino, issue 2, pages 319-342.
    23. Johan F.M. Swinnen & Anneleen Vandeplas, 2010. "Market power and rents in global supply chains," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 109-120, November.
    24. Richard Green & Julian M. Alston, 1990. "Elasticities in AIDS Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(2), pages 442-445.
    25. Tsang, Eric W. K., 2014. "Old and New," Management and Organization Review, Cambridge University Press, vol. 10(03), pages 390-390, November.
    26. Anania, Giovanni & Pupo D'Andrea, Maria Rosaria, 2007. "The Global Market for Olive Oil: Actors, Trends, Prospects and Research Needs," 103rd Seminar, April 23-25, 2007, Barcelona, Spain 9446, European Association of Agricultural Economists.
    27. Resano, Helena & Sanjuán, Ana I. & Albisu, Luis M., 2012. "Consumers’ response to the EU Quality policy allowing for heterogeneous preferences," Food Policy, Elsevier, vol. 37(4), pages 355-365.
    28. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Antonio Stasi & Francesco Diotallevi & Andrea Marchini, 2012. "Strategie di prezzo e profittabilit? nel mercato degli oli extra-vergine di oliva: un modello di analisi attraverso gli scanner data," RIVISTA DI ECONOMIA AGRARIA, FrancoAngeli Editore, vol. 0(1), pages 69-88.
    2. Dhar, Tirtha Pratim & Chavas, Jean-Paul & Cotterill, Ronald W., 2003. "An Economic Analysis of Product Differentiation under Latent Separability," 2003 Annual meeting, July 27-30, Montreal, Canada 21892, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Rojas, Christian, 2005. "Market Power and Price Competition in U.S. Brewing," Research Reports 149024, University of Connecticut, Food Marketing Policy Center.
    4. Irz, Xavier & Mazzocchi, Mario & Réquillart, Vincent & Soler, Louis-Georges, 2015. "Research in Food Economics: past trends and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 187-237, March.
    5. Asche, Frank & Guttormsen, Atle G. & Kristofersson, Dadi & Roheim, Cathy A., 2005. "Import Demand Estimation and the Generalized Composite Commodity Theorem," 2005 Annual meeting, July 24-27, Providence, RI 19432, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Stavroula Malla & K. K. Klein & Taryn Presseau, 2020. "Have health claims affected demand for fats and meats in Canada?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(3), pages 271-287, September.
    7. William Barnett & Ousmane Seck, 2006. "Rotterdam vs Almost Ideal Models: Will the Best Demand Specification Please Stand Up?," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 200605, University of Kansas, Department of Economics.
    8. Tirtha Pratim Dhar & Jean-Paul Chavas & Ronald W. Cotterill & Brian W. Gould, 2002. "An Econometric Analysis of Brand Level Strategic Pricing Between Coca Cola and Pepsi Inc," Food Marketing Policy Center Research Reports 065, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    9. Ballco, Petjon & Gracia, Azucena, 2020. "Do market prices correspond with consumer demands? Combining market valuation and consumer utility for extra virgin olive oil quality attributes in a traditional producing country," Journal of Retailing and Consumer Services, Elsevier, vol. 53(C).
    10. Federico Ciliberto & GianCarlo Moschini & Edward D. Perry, 2019. "Valuing product innovation: genetically engineered varieties in US corn and soybeans," RAND Journal of Economics, RAND Corporation, vol. 50(3), pages 615-644, September.
    11. Panle Jia & Pinelopi K. Goldberg & Shubham Chaudhuri, 2006. "Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India," American Economic Review, American Economic Association, vol. 96(5), pages 1477-1514, December.
    12. Luigi Roselli & Domenico Carlucci & Bernardo Corrado Gennaro, 2016. "What Is the Value of Extrinsic Olive Oil Cues in Emerging Markets? Empirical Evidence from the U.S. E‐Commerce Retail Market," Agribusiness, John Wiley & Sons, Ltd., vol. 32(3), pages 329-342, July.
    13. Bokhari, Farasat A.S. & Mariuzzo, Franco, 2018. "Demand estimation and merger simulations for drugs: Logits v. AIDS," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 653-685.
    14. William A. Barnett & Ousmane Seck, 2008. "Rotterdam model versus almost ideal demand system: will the best specification please stand up?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(6), pages 795-824.
    15. Taniguchi, Kiyoshi & Chern, Wen S., 2000. "Income Elasticity Of Rice Demand In Japan And Its Implications: Cross-Sectional Data Analysis," 2000 Annual meeting, July 30-August 2, Tampa, FL 21755, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Genakos, Christos D., 2004. "Differential merger effects: the case of the personal computer industry," LSE Research Online Documents on Economics 6726, London School of Economics and Political Science, LSE Library.
    17. Yanghao Wang & Metin Çakır, 2020. "Welfare impacts of new demand‐enhancing agricultural products: The case of Honeycrisp apples," Agricultural Economics, International Association of Agricultural Economists, vol. 51(3), pages 445-457, May.
    18. Robert Clark & Yiran Gong, 2021. "Why Do Some New Products Fail? Evidence from the Entry and Exit of Vanilla Coke," Working Paper 1475, Economics Department, Queen's University.
    19. Hausman, Jerry A. & Leonard, Gregory K., 2007. "Estimation of patent licensing value using a flexible demand specification," Journal of Econometrics, Elsevier, vol. 139(2), pages 242-258, August.
    20. Holt, Matthew T. & Goodwin, Barry K., 2009. "The Almost Ideal and Translog Demand Systems," MPRA Paper 15092, University Library of Munich, Germany.

    More about this item

    Keywords

    Integration and differentiation policies; Extra-virgin olive oil demand; Pricing strategies; Industrial and distribution strategies;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D30 - Microeconomics - - Distribution - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bap:journl:180304. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Carlson (email available below). General contact details of provider: http://www.bapress.ca .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.