Fast Food, Addiction, and Market Power

Timothy J. Richards, Paul M. Patterson and Stephen F. Hamilton ()

Journal of Agricultural and Resource Economics, 2007, vol. 32, issue 03

Abstract: Many attribute the rise in obesity since the early 1980's to the overconsumption of fast food. A dynamic model of a different-product industry equilibrium shows that a firm with market power will price below marginal cost in a steady-state equilibrium. A spatial hedonic pricing model is used to test whether fast food firms set prices in order to exploit their inherent addictiveness. The results show that firms price products dense in addictive nutrients below marginal cost, but price products high in nonaddictive nutrients higher than would be the case in perfect competition.

Keywords: addiction; brand loyalty; fast food; generalized method of moments; hedonic pricing; nutrients; shadow values; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety (search for similar items in EconPapers)
Date: 2007
View list of references

Downloads: (external link)
http://purl.umn.edu/7077 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:ags:jlaare:7077

Access Statistics for this article

More articles in Journal of Agricultural and Resource Economics from Western Agricultural Economics Association
Contact information at EDIRC.
Series data maintained by AgEcon Search ().