Beyond Metropolitan Averages: Food Demand Across Local Markets

Demand estimates are commonly used to inform firm strategy and public policy, yet they can obscure important variation in demand across geographic space that is relevant for local business decisions and policy interventions. Prior work documents demand heterogeneity across countries, regions, states, and between coarse urban‐rural categories, but evidence on sub‐metropolitan variation is limited. This study documents within‐metro geographic heterogeneity in market shares and willingness‐to‐pay (WTP) for retail and foodservice protein products. I use nearly six years of publicly available survey data and random parameters logit models that include municipality interactions with alternative‐specific constants and price sensitivity to estimate municipality‐specific market shares and WTP in the Phoenix metropolitan area. Demand varies substantially across adjacent municipalities. Central Phoenix residents exhibit higher retail WTP for conventional beef, pork, and chicken products, while both central Phoenix and Scottsdale‐Tempe residents show consistently higher foodservice WTP. Median WTP in these municipalities is roughly 30–50% higher than in surrounding suburbs, whereas suburban groups exhibit similar valuations to one another. These within‐metro differences are large enough to affect targeted pricing and assortment strategies and to produce uneven distributional welfare effects from local price policies (e.g., taxes). The results suggest that investment in geographically refined demand analyses could better inform policy interventions and business decisions at the local level, where those decisions are often made.