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

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  • 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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    Cited by:

    1. Eoin McLaughlin & Paul Sharp, 2021. "Competition between organisational forms in Danish and Irish dairying around the turn of the twentieth century," Business History, Taylor & Francis Journals, vol. 63(2), pages 314-341, February.
    2. 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, European Historical Economics Society, vol. 19(4), pages 432-453.
    3. Jensen, Peter Sandholt & Lampe, Markus & Sharp, Paul & Skovsgaard, Christian Volmar, 2018. "Getting to Denmark' : the Role of Elites for Development," IFCS - Working Papers in Economic History.WH 26211, Universidad Carlos III de Madrid. Instituto Figuerola.
    4. Bentzen, Jeanet & Boberg-Fazlic, Nina & Sharp, Paul & Volmar Skovsgaard, Christian & Vedel, Christian, 2023. "Holy Cows and Spilt Milk: The Impact of Religious Conflict on Firm-Level Productivity," CAGE Online Working Paper Series 696, Competitive Advantage in the Global Economy (CAGE).
    5. 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.
    6. Sharp, Paul & Jensen, Peter & Lampe, Markus & Skovsgaard, Christian, 2018. "‘Getting to Denmark’: the Role of Elites for Development," CEPR Discussion Papers 12679, C.E.P.R. Discussion Papers.
    7. Eoin McLaughlin & Paul Sharp & Xanthi Tsoukli & Christian Vedel, 2021. "Ireland in a Danish mirror: A microlevel comparison of the productivity of Danish and Irish creameries before the First World War," Working Papers 0219, European Historical Economics Society (EHES).

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    More about this item

    Keywords

    Butter; margarine; dairies; new products; quality changes;
    All these keywords.

    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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