Reasons for high food prices in small market areas: The case of the Åland Islands

Ville Aalto-Setälä, Jouko Kinnunen and Katri Koistinen
Additional contact information
Ville Aalto-Setälä: National Consumer Research Centre, P.O. Box 5, FIN-00531 Helsinki, Finland. E-mail: ville.aalto-setala@ncrc.fi, Postal: National Consumer Research Centre, P.O. Box 5, FIN-00531 Helsinki, Finland. E-mail: ville.aalto-setala@ncrc.fi
Jouko Kinnunen: Statistics and Research Åland (ÅSUB), P.O. Box 1187, AX-22111, Mariehamn, Åland, Finland. E-mail: jouko.kinnunen@asub.aland.fi, Postal: Statistics and Research Åland (ÅSUB), P.O. Box 1187, AX-22111, Mariehamn, Åland, Finland. E-mail: jouko.kinnunen@asub.aland.fi
Katri Koistinen: National Consumer Research Centre, P.O. Box 5, FIN-00531 Helsinki, Finland. E-mail: katri.koistinen@ncrc.fi, Postal: National Consumer Research Centre, P.O. Box 5, FIN-00531 Helsinki, Finland. E-mail: katri.koistinen@ncrc.fi

Agribusiness, 2004, vol. 20, issue 1, 17-29

Abstract: This article considers the reasons for high grocery prices in a small isolated market. The starting point of our study is the knowledge that the price of food in the Åland Islands-a small archipelago between Finland and Sweden-is significantly higher than in continental Finland. We also know that store-level economies of scale in grocery retailing mean that the structure of a small market is, even in the best case, either inefficient or uncompetitive. The article compares the price level of stores in Åland and Finland. Our aim is to decompose the price differences and allocate them between their various causes. The empirical results of the study are in accordance with the theory: high prices in Åland arise from a small average store size, high concentration in both the retailing and the food processing sector, border taxes, and transportation costs. An additional source of high prices is the strong regional spirit of the Ålanders: they are prepared to pay higher prices for products that are made in Åland. [JEL citations: D430, L110, L810]. © 2004 Wiley Periodicals, Inc. Agribusiness 20: 17-29, 2004.

Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1002/agr.10083 Link to full text; subscription required (text/html)

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: https://EconPapers.repec.org/RePEc:wly:agribz:v:20:y:2004:i:1:p:17-29

DOI: 10.1002/agr.10083

Access Statistics for this article

Agribusiness is currently edited by Ronald W. Cotterill

More articles in Agribusiness from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().