Owner Motivations in the UK Speciality Food Sector

Andrew Bugg
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Andrew Bugg: Centre for Competition Policy and School of Economics, University of East Anglia

No 2007-04, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

Abstract: This paper investigates empirically whether owner motivations are consistent with neoclassical models of profit maximisation. Contrary to the neoclassical model, in some markets owners gain private benefits from supplying products with certain characteristics. To consider this issue, a full theoretical model that allows owners to consider not only profit, but also utility, in their choices of price, product quality, and the use of an owner-specific production method was developed. Information was gathered on owner motivations from the UK speciality food sector to test the propositions of the theoretical model. Evidence of systematic utility maximisation is found and utility maximising owners set higher profit maximising prices and produce a higher quality product. These findings have implications for the UK speciality food sector.

Keywords: Speciality food; objective function heterogeneity; factor analysis; seemingly unrelated regressions. (search for similar items in EconPapers)
JEL-codes: C1 C3 L1 L2 L7 Q1 (search for similar items in EconPapers)
Date: 2007-03-01
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:uea:ueaccp:2007_04

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