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

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