Agric. Econ. - Czech, 2006, 52(5):225-235 | DOI: 10.17221/5019-AGRICECON

Demand elasticities and price-cost margin ratios for grocery products in different socioeconomic groups

C. Akbay, E. Jones
1 Department of Agricultural Economics, University of Sutcu Imam, Kahramanmaras, Turkey
2 Department of Agricultural, Environmental and Development Economics, Ohio State University, Columbus, Ohio, USA

In this paper, the demand elasticities and the size of price cost margin (PCM) ratios were investigated for private and national branded products using scanner data from a large supermarket chain in Ohio, USA. Demand elasticities and PCM ratios were measured for 32 national branded and 14 private label products for 9 food categories by using Almost Ideal Demand System. According to the results, lower-income shoppers were more prices sensitive than higher-income shoppers and the average price elasticities were ranged between -1.96 (Snacks) and -3.33 (ice-cream). According to the results, non-collusive case gave smaller PCM than the Bertrand case and the average PCM ratios ranged from 27% for ice cream to 54% for chips.

Keywords: price competition, AIDS model, food, elasticity, private and national brand

Published: May 31, 2006  Show citation

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Akbay C, Jones E. Demand elasticities and price-cost margin ratios for grocery products in different socioeconomic groups. Agric. Econ. - Czech. 2006;52(5):225-235. doi: 10.17221/5019-AGRICECON.
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