Owner Motivations in the UK Speciality Food Sector

Andrew Bugg

No 07-4, Working Papers from Centre for Competition Policy, University of East Anglia

Abstract: This paper investigates empirically whether owner motivations are consistent with neoclassical models of profit maximisation. Contrary to the neoclassical model, in some markets owners gain private benefits from supplying products with certain characteristics. To consider this issue, a full theoretical model that allows owners to consider not only profit, but also utility, in their choices of price, product quality, and the use of an owner-specific production method was developed. Information was gathered on owner motivations from the UK speciality food sector to test the propositions of the theoretical model. Evidence of systematic utility maximisation is found and utility maximising owners set higher profit maximising prices and produce a higher quality product. These findings have implications for the UK speciality food sector.

Keywords: Speciality food; objective function heterogeneity; factor analysis; seemingly unrelated regressions. (search for similar items in EconPapers)
JEL-codes: C1 C3 L1 L2 L7 Q1 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2007-03
New Economics Papers: this item is included in nep-agr and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:ccp:wpaper:wp07-04

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