Demand and Pricing in the U.S. Margarine Industry

Kim Donghun
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Kim Donghun: International University of Japan

Journal of Agricultural & Food Industrial Organization, 2008, vol. 6, issue 1, 19

Abstract: This paper provides estimates of U.S. demand for margarine and price-cost margins. Demand is estimated using a mixed logit model, which provides a flexible substitution pattern among products. We find that product characteristics, such as nutrient facts, package size and product forms, and household income and age composition are important determinants of demand for margarine. The estimated product-level price elasticities, which are defined as the percent change in market share corresponding to a one percent change in price, range from -1.85 to -6.34, while the cross-price elasticities vary from 0.01 to 0.98. The estimated price-cost margins vary from 28 percent to 58 percent depending on the assumption of industry conduct.

Keywords: demand and pricing relationship; market power; mixed logit model (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (2)

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DOI: 10.2202/1542-0485.1211

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