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Greasing the Wheels of Rural Transformation? Margarine and the Competition for the British Butter Market

Author

Listed:
  • Markus Lampe

    () (Universidad Carlos III Madrid)

  • Paul Sharp

    () (University of Southern Denmark)

Abstract

We consider an example of the impact of a new good on producers of close substitutes: the invention of margarine and its rapid introduction into the British market from the mid-1870s. This presented a challenge to the traditional suppliers of that market, butter producers from different European countries. We argue that the capacity to react quickly to the appearance of this cheap substitute by improving quality and establishing product differentiation was critical for the fortunes of butter producers. We illustrate this by discussing the different reactions to margarine and quality upgrading in Ireland, Denmark and the Netherlands. A statistical analysis using monthly data for Britain from 1881-87 confirms that margarine had a greater impact on the price of poor quality butter than that of high quality butter, presumably because it was a stronger substitute.

Suggested Citation

  • Markus Lampe & Paul Sharp, 2013. "Greasing the Wheels of Rural Transformation? Margarine and the Competition for the British Butter Market," Working Papers 0043, European Historical Economics Society (EHES).
  • Handle: RePEc:hes:wpaper:0043
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    References listed on IDEAS

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    Cited by:

    1. Sofia Teives Henriques & Paul Sharp, 2016. "The Danish agricultural revolution in an energy perspective: a case of development with few domestic energy sources," Economic History Review, Economic History Society, vol. 69(3), pages 844-869, August.
    2. Peter Sandholt Jensen & Markus Lampe & Paul Sharp & Christian Volmar Skovsgaard, 2018. "‘Getting to Denmark’: the Role of Elites for Development," Working Papers 0125, European Historical Economics Society (EHES).
    3. Markus Lampe & Paul Sharp, 2015. "How the Danes discovered Britain: the international integration of the Danish dairy industry before 1880," European Review of Economic History, Oxford University Press, vol. 19(4), pages 432-453.
    4. Eoin McLaughlin & Paul Sharp, 2015. "Competition between organisational forms in Danish and Irish dairying around the turn of the twentieth century," Discussion Papers in Environment and Development Economics 2015-16, University of St. Andrews, School of Geography and Sustainable Development.

    More about this item

    Keywords

    Butter; margarine; dairies; new products; quality changes;

    JEL classification:

    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • N53 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Europe: Pre-1913
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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