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Estimating own and cross brand price elasticities, and price-cost margin ratios using store-level daily scanner data

Author

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  • Junko Kinoshita

    (Policy Research Institute, Japanese Ministry of Agriculture, Forestry and Fisheries, 2-2-1 Nishigahara, Kita-ku, Tokyo 114-0024, Japan. E-mail: junkot@primaff.affrc.go.jp)

  • Nobuhiro Suzuki

    (Department of Agricultural Economics, Kyushu University, 6-10-1 Hakozaki, Higashi-ku, Fukuoka 812-8581. E-mail: suzukino@arg.kyushu-u.ac.jp)

  • Tamotsu Kawamura

    (Department of Environmental Science, Iwate University, 3-18-8 Ueda, Morioka, Iwate, 020-8550, Japan. E-mail: kawamura@iwate-u.ac.jp)

  • Yasuhito Watanabe

    (Agricultural Cooperative Insurance Research Institute, 5-1,Kohjimachi 3 chome, Chiyoda-ku, Tokyo 102-0083, Japan. E-mail: ya-watanabe@ja-kyosai.or.jp)

  • Harry M. Kaiser

    (Department of Applied Economics and Management, Cornell University, Ithaca, NY 14853-7801. E-mail: hmk2@cornell.edu)

Abstract

This article addresses three issues related to Japanese dairy demand analysis. First, an econometric fluid milk demand model is estimated using store-level daily scanner data to determine whether the own-price elasticities are significantly different from previous estimates based on aggregate market-level data. This is important because of the current debate among Japanese dairy industry leaders concerning whether fluid milk is price inelastic or elastic. Own-price elasticity differences between fresh and reconstituted milk products are also examined. Second, milk product cross-price elasticities are estimated to measure the degree, if any, of substitutability between fresh milk and reconstituted milk products. Because most previous studies have relied upon aggregate market-level data, there are no previous estimates of cross-price elasticities for fresh milk and reconstituted milk products. Finally, price-cost margin ratios are estimated for each commodity using a method that does not require cost data, but rather relies on assumptions regarding the degree of competition to derive the price-cost margin ratio [Econlit alphanumeric subject codes: Q110, Q130]. © 2001 John Wiley & Sons, Inc.

Suggested Citation

  • Junko Kinoshita & Nobuhiro Suzuki & Tamotsu Kawamura & Yasuhito Watanabe & Harry M. Kaiser, 2001. "Estimating own and cross brand price elasticities, and price-cost margin ratios using store-level daily scanner data," Agribusiness, John Wiley & Sons, Ltd., vol. 17(4), pages 515-525.
  • Handle: RePEc:wly:agribz:v:17:y:2001:i:4:p:515-525
    DOI: 10.1002/agr.1032
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    References listed on IDEAS

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    1. Cotterill, Ronald W. & Haller, Lawrence E., 1994. "Market Strategies in Branded Dairy Product Markets," Research Reports 25149, University of Connecticut, Food Marketing Policy Center.
    2. Langan, Glenn E. & Cotterill, Ronald W., 1994. "Estimating Brand Level Demand Elasticities and Measuring Market Power for Regular Carbonated Soft Drinks," Working Papers 116168, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
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    Cited by:

    1. Basak Canan & Ronald W. Cotterill, 2006. "Strategic pricing in a differentiated product oligopoly model: fluid milk in Boston," Agricultural Economics, International Association of Agricultural Economists, vol. 35(1), pages 27-33, July.
    2. Benaissa Chidmi & Rigoberto A. Lopez & Ronald W. Cotterill, 2005. "Retail oligopoly power, dairy compact, and Boston milk prices," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 477-491.
    3. Mauricio V.L. Bittencourt & Ratapol P. Teratanavat & Wen S. Chern, 2007. "Food consumption and demographics in Japan: Implications for an aging population," Agribusiness, John Wiley & Sons, Ltd., vol. 23(4), pages 529-551.
    4. Elena Lopez & Rigoberto A. Lopez, 2009. "Demand for differentiated milk products: implications for price competition," Agribusiness, John Wiley & Sons, Ltd., vol. 25(4), pages 453-465.
    5. Bonnet, Céline & Corre, Tifenn & Réquillart, Vincent, 2015. "Price Transmission in Food Chains: The Case of the Dairy Industry," TSE Working Papers 15-563, Toulouse School of Economics (TSE).

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