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Demand elasticities and price-cost margin ratios for grocery products in different socioeconomic groups

Author

Listed:
  • C. Akbay

    (Department of Agricultural Economics, University of Sutcu Imam, Kahramanmaras, Turkey)

  • E. Jones

    (Department of Agricultural Economics, University of Sutcu Imam, Kahramanmaras, Turkey)

Abstract

In this paper, the demand elasticities and the size of price cost margin (PCM) ratios were investigated for private and national branded products using scanner data from a large supermarket chain in Ohio, USA. Demand elasticities and PCM ratios were measured for 32 national branded and 14 private label products for 9 food categories by using Almost Ideal Demand System. According to the results, lower-income shoppers were more prices sensitive than higher-income shoppers and the average price elasticities were ranged between -1.96 (Snacks) and -3.33 (ice-cream). According to the results, non-collusive case gave smaller PCM than the Bertrand case and the average PCM ratios ranged from 27% for ice cream to 54% for chips.

Suggested Citation

  • C. Akbay & E. Jones, 2006. "Demand elasticities and price-cost margin ratios for grocery products in different socioeconomic groups," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 52(5), pages 225-235.
    • Handle: RePEc:caa:jnlage:v:52:y:2006:i:5:id:5019-agricecon
    DOI: 10.17221/5019-AGRICECON
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    References listed on IDEAS

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    1. P. Bielik & Z. Šajbidorová, 2009. "Elasticity of consumer demand on pork meat in the Slovak Republic," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 55(1), pages 12-19.
    2. Davis, Christopher G. & Dong, Diansheng & Blayney, Donald P. & Yen, Steven T. & Stillman, Richard, . "U.S. Fluid Milk Demand: A Disaggregated Approach," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 15(01), pages 1-26.
    3. Karel JANDA & Jakub MIKOLÁŠEK & Martin NETUKA, 2010. "Complete almost ideal demand system approach to the Czech alcohol demand," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 56(9), pages 421-434.
    4. Renata BENDA PROKEINOVA & Martina HANOVA, 2016. "Modelling consumer's behaviour of the meat consumption in Slovakia," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 62(5), pages 235-245.

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