Abstract

This paper provides estimates of U.S. demand for margarine and price-cost margins. Demand is estimated using a mixed logit model, which provides a flexible substitution pattern among products. We find that product characteristics, such as nutrient facts, package size and product forms, and household income and age composition are important determinants of demand for margarine. The estimated product-level price elasticities, which are defined as the percent change in market share corresponding to a one percent change in price, range from -1.85 to -6.34, while the cross-price elasticities vary from 0.01 to 0.98. The estimated price-cost margins vary from 28 percent to 58 percent depending on the assumption of industry conduct.

Submitted: December 16, 2007 · Accepted: February 23, 2008 · Published: March 3, 2008

Recommended Citation

Kim, Donghun (2008) "Demand and Pricing in the U.S. Margarine Industry," Journal of Agricultural & Food Industrial Organization: Vol. 6 : Iss. 1, Article 1.
Available at: http://www.bepress.com/jafio/vol6/iss1/art1