Welfare Effects of Technological Convergence in Processed Food Industries

We develop a monopolistic competition model to investigate effects of international technological convergence on factor rewards, output composition, and welfare. Comparative static analysis indicates technological convergence improves the follower's—but impairs the leader's—international competitiveness. The leader's welfare improves unambiguously; the follower's welfare depends on the relative strength of convergence's income and terms-of-trade effects. We use data from seventeen food industries in thirty countries, 1993–2001, to test these analytical predictions. Evidence of convergence is found in thirteen of seventeen industries. Convergence lifts followers' relative wages and global value-added shares. Followers benefit from convergence's positive income effect. Leaders benefit from higher terms of trade.     

Consumer Welfare and the Loss Induced by Withholding Information: The Case of BSE in Italy

The paper develops a measure of consumer welfare losses associated with withholding information about a possible link between BSE and vCJD. The Cost of Ignorance (COI) is measured by comparing the utility of the informed choice with the utility of the uninformed choice, under conditions of improved information. Unlike previous work that is largely based on a single equation demand model, the measure is obtained retrieving a cost function from a dynamic Almost Ideal Demand System. The estimated perceived loss for Italian consumers due to delayed information ranges from 12 percent to 54 percent of total meat expenditure, depending on the month assumed to embody correct beliefs about the safety level of beef.     

Assessing Consumer and Producer Preferences for Animal Welfare Using a Common Elicitation Format

We assess pig farmers’ willingness‐to‐accept (WTA) higher farm animal welfare (FAW) standards and consumers’ willingness‐to‐pay (WTP) for thus enhanced standards. The analysis is based on discrete choice experiments with nearly identical choice sets for both farmers (N=140) and consumers (N=554). Based on preference estimates from a random parameter logit (RPL) model, supply and demand curves for high‐welfare pork in Germany are estimated and market equilibria are derived for alternative levels of FAW. We find that estimates of consumer WTP are significantly positive for all FAW attributes: consumers value more surface space per pig, more bedding and manipulable material, less surgical interventions and shorter transportation times. In contrast, our model revealed significant producer WTA estimates only for surface area per pig and the amount of bedding material on offer, but not for the other FAW attributes. Farmers who expect to continue farming and engage in direct marketing are more likely to adopt higher FAW standards. Male consumers and those who find price more important than brand, origin or taste are less likely to buy high‐welfare pork, as are consumers who never purchase organic meat products. Market simulations for high‐welfare pork indicate increasing divergence between demand and supply with rising FAW standards. We estimate a market share of 44.6% for pork produced in compliance with an entry‐level FAW programme with standards only slightly above the legal minimum. Programmes with more demanding standards are estimated to gain much smaller market shares.     

Consumer Choice of Retail Food Store Formats in Qingdao,China

Abstract

This study analyzes Chinese consumer behavior across different retail food store formats and how household demographics affect shopping behavior. A multivariate probit model with four categories of retail food store formats (wet markets, small grocery stores, supermarkets, and hypermarkets) in Quindao, China is estimated. The results indicate that the new hypermarkets are substitutes for supermarkets, but they do not compete extensively with wet markets and small grocery stores. Furthur development of various catagories of food shopping store formats is linked to store-owner characteristics, potential interrelations among existing retail formats, as well as consumers' demographics and shipping habits.     

Measuring Perceived Performance of the Food System and Consumer Food‐Related Welfare

The paper explores the use of multi‐item summated scales for the measurement of the perceived performance of the food system and of an index to measure consumer food‐related welfare. Scales are developed that encompass a range of factors that influence the welfare consumers derive from food, including food safety, convenience, ethical issues, health and nutrition, taste and cost. These scales are applied to a national sample of food consumers in the United States and the United Kingdom. On the basis of the survey results, there is evidence that the scales are both reliable and valid measures of the perceived performance of the food system in both countries. An index of consumer food‐related welfare is developed that weights the various performance measures according to respondents' measure of importance. Survey respondents judge that the food system is not performing particularly well in either country. Although more work is required on the use of summated multi‐item scales for this purpose, the results suggest that this is a potentially useful approach that provides relevant information on the impact of different elements of the food system on consumer welfare.     

Consumer Welfare and the Livestock Economy in the United States

This paper analyzes the responsiveness of the U.S. meal and poultry economy to government policies and other exogenous shocks. In particular, it focuses on the measurement of changes to consumer welfare. An explicit econometric model represents the supply of fed beef, non-fed beef, pork, and poultry. The interaction between the livestock and feed grain markets is captured by an econometric model of the supply and demand for corn. Consumers are represented by a complete system of consumer demand equations. The model is used for a partial analysis of the welfare effects of an actual agricultural policy decision – the sale of large quantities of grains to the Soviet Union in the third quarter of 1972. The loss to consumers that is attributable to the increased grain exports did not reach its maximum until the second quarter of 1975. It is estimated that from 1973 to 1975 consumers suffered a reduction of meat consumption that they valued at $4.5 billion (U.S.). Furthermore, the effects of grain exports proved far larger than the losses due to the poor harvests of 1973 and 1974. Finally, attempts to shelter consumers from the effects of the increased corn exports, either by increased beef imports or increased grain price supports, would have had little success in compensating for the welfare loss actually suffered. Ce papier fail ?analvse de la réponse des secleurs de ?économie quant au bétail et à la volatile aux Flats-Unis, leur reponse à la politique gouvernementale et à?aulres coups exterieurs. En particulier, ce papier se concentre sur la mésure des changements au bien-étre des consommateurs. Un modèle économélrique qui est explicite représente ?approvisionnement du boeuf brouiè, du boeuf non-broutè, du pore el de la volatile. Lcar;action réciproque entre le marché de bélail et ie marché de grains est monlré par un modèle economelrique de ?offre et de la demande pour mats. Un système des équations représente la demande des consommateurs. On utilise le modèle pour ohtenir une analyse parlielle des effeis en ce qui concerne le bien-étre des consommateurs par suite ?une décision faite ?une politique agricole – celle de la vente de grandes quantités de grains à?Union soviétique au troisième quartier de ?année 1972. Laperte aux consommateurs qui est imputable aux exportations augmentées de grain n'apas alteinl son maximum jusqu'au deuxième quartier de 1975. On a eslimé que de 1973 à 1975 les consommateurs ont essuyé une réduction de la consommation de viande qu'ils ont evaluée à$4.5 milliard (en dollars des Etats-Unis). En outre, les effeis des exponations de grain se sont révélés bien grands que les effets des moissons maigres de 1973 el 1974. Finalement, des efforts de protéger les consommateurs contre les effets des exportations augmentees de maìs, ou par des importations augmentees de boeufou par augmenter le soutien pour le prix du grain auraient eu peu de succès à remplacer les pertes en fait essuyées.     

Analyzing Consumer Preference for Wine Product Bundles: Implications for the Retail and Wine Industry

This research examines a marketing technique (bundling) that wine companies may use to gain access to retail stores. The study examined consumers' perception toward bundling with respect to the Australian wine market and the results allowed for the formulation of market segments, which aimed to provide a better understanding of the wine-bundle purchaser. Cluster analysis highlighted three market segments, in particular, one consumer segment is prone to purchasing wine bundles and is interested in deals. While exploratory in nature, the research may provide an insight into global wine marketing strategy.     

Market Power in the Philippine Retail and Processed Food Industry

Various models have been employed to analyze market power in the food industry but none has explored combining these models to reinforce their strengths and minimize their weaknesses. This article illustrates an application of these models in a multistage framework using the case of the Philippine retail and processed food industry. Price transmission is examined in the first stage of analysis using cointegration and price asymmetry models. Conjectural variation and bargaining models are employed in the second and third stages of analysis. Results indicate that market power exists in industries where price transmission is asymmetric.     

Consumer Valuation of Food Quality and Food Safety Attributes in Vietnam

Food systems in developing countries are currently undergoing a profound transformation toward high-value products. Appropriate policies are needed to guide this transformation, presupposing good understanding of consumer preferences. We analyze consumers' valuation of different vegetable attributes in metropolitan areas of Vietnam, using contingent valuation techniques and a mediation framework for two specific examples. Consumers are willing to pay an average price premium of 60% for Chinese mustard that is free of chemical residues and of 19% for different convenience attributes of potatoes. Income levels and media have positive impacts on the willingness to pay, partly mediated through consumer perceptions.     

Industry Structure and Economic Performance in the Food Manufacturing Industries

The objective of this study is to develop a simultaneous equations model of profitability, concentration, advertising expenditures and research and development outlays for the food manufacturing indushies in the United States. The data used in the estimation are subjected to regression diagnostics in an effort to determine the importance to the estimation results of a subset of the data that can have a disproportionate influence. The estimation results, especially for the advertising expenditures relationship and the research and development outlays equation, do change when a truncated data sample (based on the omission of the outliers) is used. This serves partly to explain why there is some disagreement in the literature on market structure and economic performance with regard to the impact of several economic factors.     

Activists and Animal Welfare: Quality Verifications in the Canadian Pork Sector

Animal welfare is an emotive topic. Although most governments legislate against outright animal cruelty, animal welfare organisations have actively lobbied for more stringent farm animal welfare regulations. Food retailers and restaurant chains have faced pressure from animal welfare organisations to implement more stringent animal welfare requirements for their suppliers. Is the demand for more stringent farm animal welfare protocols primarily determined by a subset of consumers with very strong preferences or does it signal a more fundamental underlying change in societal preferences? Given the credence nature of farm animal welfare, whom do consumers trust for credible quality assurances? This article analyses the role of quality verification in a market characterised by consumers with heterogeneous preferences for animal welfare. Of particular interest are the relative strength of preferences for humane animal treatment assurances and the credibility of these quality claims. Using data from a Canadian survey targeted at two distinct samples – a general population group and members of animal welfare organisations – a discrete choice experiment is used to assess consumer attitudes towards animal welfare assurances for pork products. The credibility of quality verification by public sector, private sector and third party agents is assessed. Evidence confirms that consumer preferences for farm animal welfare assurance and the source of verification are indeed heterogeneous. Although a portion of consumers remain largely indifferent to pork products with animal welfare assurances, a group of highly motivated consumers exist with an economic incentive to lobby for tougher animal welfare standards.     

消费者需求受食品质量与安全影响的讨论分析

近年来,国内经济发展迅速,人们生活水平也得到很大提升,使得人们越来越重视安全,而食品是人们生活中的基本物质保障,是人们生活的必需品,所以食品的质量与安全问题是当下最热门的话题之一。当前消费者的需求会受食品质量与安全的影响,频发的食品质量与安全问题让人们愈发重视食品质量与安全,消费者的需求渐渐发生变化。基于此,本文展开了关于食品质量与安全对消费者需求的影响的研究。     

Consumer Choice and Health: The Importance of Health Attributes for Retail Meat Demand in Canada

Fat content is an attribute of major concern to health conscious consumers and of growing importance in the discussion of nutrition-related diseases in Canada. This paper combines multinomial logit and Almost Ideal Demand System (AIDS) analysis to investigate Canadian consumers’ preferences and retail demand for ground meat products differentiated by fat content. We apply Nielsen household and retail-level scanner data. Evidence from multinomial logit supports the hypothesis of strong habits in household's point-of-sale product choices, driven by sociodemographic characteristics and regional cultural customs. Estimates of own and cross price elasticities from the AIDS model reveal that preferences for health triumph over taste. We find that perceived healthier “extra lean” ground meats have evolved into a staple in the Canadian diet. Our results are a starting point for a more in-depth understanding of consumer behavior toward healthy food choices. This information is essential for more targeted health and nutrition policy aimed at the promotion of healthful meat choices in Canadian grocery retailing. La teneur en matière grasse est un attribut qui préoccupe les consommateurs soucieux de leur santé et un sujet qui est de plus en plus présent dans le débat sur les maladies liées à la nutrition au Canada. Le présent article combine une analyse logit multinomiale et l’analyse d’un système de demande AIDS pour étudier les préférences des consommateurs canadiens et la demande du marché de détail en produits de viande hachée différenciés par la teneur en matière grasse. Nous avons utilisé les données de Nielsen portant sur les habitudes de consommation des ménages et scannées dans les commerces de détail. Les résultats de l’analyse logit multinomiale appuient l’hypothèse selon laquelle les habitudes des ménages quant au choix de produits dans les points de vente sont bien ancrées et sont motivées par des caractéristiques sociodémographiques et des pratiques culturelles régionales. Les estimations des élasticités-prix et des élasticités-prix croisées effectuées à partir du modèle AIDS ont révélé que l’aspect « santé» des aliments l’emportait sur l’aspect « goût ». Nous avons observé que les viandes hachées très maigres perçues comme étant meilleures pour la santé sont devenues une denrée de consommation courante du régime alimentaire de la population canadienne. Nos résultats constituent un point de départ pour une étude plus approfondie sur le comportement des consommateurs concernant des choix alimentaires sains. Cette information est essentielle à l’élaboration d’une politique sur la nutrition et la santé plus ciblée visant à promouvoir des choix de viande sains dans le commerce de détail canadien.     

Alternative Firm Strategies for Signaling Quality in the Food System

Dynamics in the global food system, coupled with rapid advance in agricultural biotechnology, have resulted in additional demands for capturing information and sharing information vertically within the supply chain. Food safety and quality characteristics are a cornerstone of this information demand. Events such as foot-and-mouth disease (FMD) and bovine spongiform encephalopathy (BSE), genetic engineering and animal welfare concerns have laid the foundation for additional information need.
Managers of private firms within the food supply chain must decide how to respond to the situation. A crucial component of the problem is what and how to provide information to downstream customers as well as stipulate what and how information is received from upstream suppliers. Alternative signaling mechanisms abound. The choice among these alternative signals, or combination of alternatives, has both short- and long-run implications for the reputation of the firm, its products or services, and the efficiency with which it conducts its business. The signaling problem in the supply chain is bidirectional and has three critical dimensions: information asymmetry, incentive asymmetry, and arduous measurability. From a broad perspective, the choice set for signaling includes: strategies that rely on third-party protocols and procedures; differentiation through branding and reputation; indemnification strategies such as insurance, warranties, and bonding; and coordination strategies such as strategic alliances and vertical integration (intemalization). Each mechanism for signaling differentially influences the three dimensions of the signaling problem. No globally optimal strategy solution exists. Differentiation through branding and reputation mitigate the signaling problem relatively well compared with the other alternatives.     

Consumer Preferences for Organic Food and for the Shares of Meat and Vegetables in an Everyday Meal

Abstract

It is well established that consumers with positive preferences for organic products generally also tend to have healthy eating habits involving many fruits and vegetables but less meat. While most studies are based on single product comparisons, this study investigates consumer preferences for organic ingredients and content of meat and vegetables in the context of an everyday evening meal. Moreover, we address heterogeneity in preferences. The study is based on an online survey including a choice experiment with 506 consumers. Using principal component and latent class analyses, we identify three segments of consumers that differ with respect to preferences for organic production and content of meat and vegetables in their meals. Our findings may be valuable for authorities promoting healthy food consumption just as they provide valuable input to the catering industry and other suppliers of dinner dishes in the development and marketing of both organic and non-organic ready meals.     

Effects of the Private–Label Invasion in Food Industries

Using supermarket scanner data, we test a variety of hypotheses from trade journals about the invasion of private–label food products. According to conventional industry wisdom, name–brand firms defended their brands against new private–label products by lowering their prices, engaging in additional promotional activities, and increasingly differentiating their products. Our empirical evidence is inconsistent with these beliefs.     

Stochastic Frontier Estimation of Market Power in the Food Industries

We use a modified version of the stochastic frontier model to estimate oligopoly markups above the perfectly competitive frontier, separating out deterministic markups from purely stochastic markups. Using data from 42 US food processing industries between 1990 and 2010, empirical results indicate a widespread incidence of oligopoly power, with Lerner indexes averaging approximately 21%. Further, the estimated markups increase with industrial concentration but decrease with price elasticities and imports. Finally, the estimated Lerner indexes are in the range of previous food industry estimates using New Empirical Industrial Organization (NEIO) models.     

Consumer Attitudes toward GM Food and Pesticide Residues in India

Bacillus thuringiensis (Bt) vegetables will likely be commercialized in India soon. The technology could reduce pesticide residues in foods. Yet it is unclear whether consumers will appreciate this health advantage, or whether potential GM crop risks will dominate their attitudes. Using contingent valuation methods and a sample of urban households, we find that almost 60% of consumers would purchase Bt vegetables at current conventional vegetable prices, indicating a high acceptance level. The rest would purchase at a certain price discount. Strikingly, the required discount increases for people particularly concerned about pesticide residues, demonstrating that risk-averse consumers do not easily offset technology benefits against perceived risks.