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

  • Markus Lampe

    ()

    (Universidad Carlos III Madrid)

  • Paul Sharp

    ()

    (University of Southern Denmark)

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.

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File URL: http://ehes.org/EHES_No43.pdf
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Paper provided by European Historical Economics Society (EHES) in its series Working Papers with number 0043.

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Length: 45 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:hes:wpaper:0043
Contact details of provider: Web page: http://www.ehes.org

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  1. Henriksen, Ingrid & Lampe, Markus & Sharp, Paul, 2011. "The role of technology and institutions for growth: Danish creameries in the late nineteenth century," European Review of Economic History, Cambridge University Press, vol. 15(03), pages 475-493, December.
  2. Yoram Bauman, 2004. "Shipping the Good Apples Out: A New Perspective," Economic Inquiry, Western Economic Association International, vol. 42(3), pages 534-536, July.
  3. David Hummels & Alexandre Skiba, 2002. "Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture," NBER Working Papers 9023, National Bureau of Economic Research, Inc.
  4. André Bonfrer & Pradeep K. Chintagunta, 2004. "Store Brands: Who Buys Them and What Happens to Retail Prices When They Are Introduced?," Review of Industrial Organization, Springer, vol. 24(2), pages 195-218, 03.
  5. Christian Broda & David Weinstein, 2004. "Globalization and the gains from variety," Staff Reports 180, Federal Reserve Bank of New York.
  6. Bontemps, Christophe & Orozco, Valérie & Réquillart, Vincent, 2008. "Private Labels, National Brands and Food Prices," IDEI Working Papers 402, Institut d'Économie Industrielle (IDEI), Toulouse.
  7. KevinH. O'Rourke, 2007. "Culture, Conflict and Cooperation: Irish Dairying Before the Great War," Economic Journal, Royal Economic Society, vol. 117(523), pages 1357-1379, October.
  8. Hausman, Jerry A & Leonard, Gregory K, 2002. "The Competitive Effects of a New Product Introduction: A Case Study," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 237-63, September.
  9. Ingrid Henriksen & Markus Lampe & Paul Sharp, 2010. "The Strange Birth of Liberal Denmark: Danish trade protection and the growth of the dairy industry since the mid-nineteenth century," Discussion Papers 10-04, University of Copenhagen. Department of Economics.
  10. Mette Ejrnæs & Karl Gunnar Persson, 2006. "The Gains from Improved Market Efficiency: Trade Before and After the Transatlantic Telegraph," Discussion Papers 06-19, University of Copenhagen. Department of Economics.
  11. Ingrid Henriksen & Kevin H. O'Rourke, 2005. "Incentives, technology and the shift to year-round dairying in late nineteenth-century Denmark -super-1 ," Economic History Review, Economic History Society, vol. 58(3), pages 520-554, 08.
  12. Nicholas Crafts, 2004. "Regional GDP in Britain, 1871-1911: some estimates," Economic History Working Papers 22557, London School of Economics and Political Science, Department of Economic History.
  13. Uebele, Martin, 2011. "National and international market integration in the 19th century: Evidence from comovement," Explorations in Economic History, Elsevier, vol. 48(2), pages 226-242, April.
  14. Henriksen, Ingrid & Hviid, Morten & Sharp, Paul, 2012. "Law and Peace: Contracts and the Success of the Danish Dairy Cooperatives," The Journal of Economic History, Cambridge University Press, vol. 72(01), pages 197-224, March.
  15. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-77, March.
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