Retail Intermediation and Local Foods

Timothy J. Richards, Stephen Hamilton, Miguel Gomez and Elliot Rabinovich

American Journal of Agricultural Economics, 2017, vol. 99, issue 3, 637-659

Abstract: Direct sales of local foods, for instance through farmer’s markets, have reached a plateau, while intermediated sales (through more traditional retailers) are still rising rapidly. We provide an explanation for the growth of intermediated local foods based on the observation that consumers prefer to buy local foods as part of a shopping basket that includes both local and non-local items. We test our hypothesis using data from a natural experiment conducted by Relay Foods, an online retailer based in the U.S. state of Virginia, and a multi-variate logit model of shopping-basket demand. We find significant complementarities among items in a sample shopping basket that are not reflected in estimates from a discrete-choice model of category demand. Estimates of a structural pricing-and-local-content model reveal important incentives for retailers to offer local foods as part of a broader selection of grocery items.

Keywords: Local food; retail prices; food retailing; shopping-basket model (search for similar items in EconPapers)
JEL-codes: D12 D83 L13 L81 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:99:y:2017:i:3:p:637-659.

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