Food prices in remote areas of Scotland: A natural experiment measuring the out-shopping effect

An important aspect of the survival of remote rural areas in a country is whether the food prices that their citizens face are similar to those elsewhere. There is a conflictive literature about existence and magnitude of a “remoteness premium” (i.e., whether households in remote areas pay more for food than the average prices paid in the country). This paper investigates the effect of out-shopping on food expensiveness in remote rural areas in Scotland. For this purpose, a natural experiment was used. An expensiveness index was constructed using home scanner data. Food expensiveness was compared during the 2020 COVID-19 lockdown, when travel restriction prevented out-shopping, with the data from the same period in 2019. It was assumed that the difference – after controlling for the change in the purchased bundle of goods – may be attributed to the lockdown effect, preventing out-shopping. The results find that the premium paid in remote rural areas was small and out-shopping is an important factor limiting food expensiveness in remote areas of Scotland.