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The Determination of National Retail and Wholesale Prices of Infant Formula

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  • Levedahl, J. William
  • Reed, Albert J.

Abstract

Changes in both retail and wholesale infant formula prices can affect the ability of WIC to supply infant formula to participants. This paper constructs a joint relationship that links national wholesale and retail infant formula prices to economic and policy variables. This joint framework provides a richer interpretation of current issues and questions associated with these markets than frameworks intent on explaining either retail or wholesale prices alone. We show how this framework can be implemented empirically, and demonstrate how it can be used to obtain empirical estimates of retail and wholesale price flexibilities with respect to rebates, and with respect to changes in WIC participation. Both have implications for cost containment.

Suggested Citation

  • Levedahl, J. William & Reed, Albert J., 2005. "The Determination of National Retail and Wholesale Prices of Infant Formula," 2005 Annual meeting, July 24-27, Providence, RI 19274, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea05:19274
    DOI: 10.22004/ag.econ.19274
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    References listed on IDEAS

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    1. Lewbel, Arthur, 1996. "Aggregation without Separability: A Generalized Composite Commodity Theorem," American Economic Review, American Economic Association, vol. 86(3), pages 524-543, June.
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