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Culture, Tastes, and Market Integration: Testing the Localized Taste Hypothesis

Cecilia Guerrero, Tomoya Mori () and Jens Wrona

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: Using monthly price data from the Survey of Wholesale Markets for Fruits and Vegetables of Japan, we demonstrate that regional taste differences are an obstacle to inter-regional market integration. We propose a novel strategy for identifying the causal effect of localized tastes on bilateral market integration. We use the spatial distribution of historical dialects in Japan to measure historical-cultural proximity, which can be used as an instrument for the persistent dissimilarity in local food preferences. In accordance with the localized taste hypothesis, we find that regions which historically did not share a similar dialect/culture are characterized by persistent taste differences, explaining the lack of bilateral market integration among these regions.

Pages: 29 pages
Date: 2021-06
New Economics Papers: this item is included in nep-agr, nep-his and nep-ure
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