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Effects of Package Size on Household Food Purchases

Metin Çakır, Joseph V. Balagtas, Abigail M. Okrent and Mariana Urbina‐Ramirez

Applied Economic Perspectives and Policy, 2021, vol. 43, issue 2, 781-801

Abstract: This article analyzes household food purchase behavior in response to changes in product package size. In particular, we exploit food manufacturer package downsizing strategy and design a difference‐in‐difference analysis to track shifts in household purchase volume in affected and comparison product groups before and after package size changes. We use UPC‐level purchase data from a panel of households over a seven‐year period for analysis. Our empirical approach overcomes two important limitations of the extant literature: it (i) accounts for determinants of purchase behavior and (ii) produces results that elucidate the long‐term effects of package size changes. The main finding is that, on average, smaller package size significantly reduces household purchase volume, which indicates a positive correlation between package size and food‐at‐home consumption. The results also show that downsizing does not have a significant effect on the purchase volume of non‐downsized products and on the number of packages purchased. The implications of the results for policy and potential interventions are discussed.

Date: 2021
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