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The FAST Method: Estimating Unconditional Demand Elasticities for Processed Foods in the Presence of Fixed Effects

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  • Bergtold, Jason S.
  • Akobundu, Eberechukwu
  • Peterson, Everett B.

Abstract

This study estimates a set of unconditional own-price and expenditure elasticities across time for 49 processed food categories using scanner data and the FAST multi-stage demand system with fixed effects across time. Estimated own-price elasticities are generally much larger, in absolute terms, than previous estimates, while our expenditure elasticities are generally much lower. The use of disaggregated product groupings, scanner data, and the estimation of unconditional elasticities likely accounts for these differences. Results of the study suggest providing more disaggregate product-level demand elasticities could aid in the economic analysis of issues relating to industry competitiveness or the impact of public policy.

Suggested Citation

  • Bergtold, Jason S. & Akobundu, Eberechukwu & Peterson, Everett B., 2004. "The FAST Method: Estimating Unconditional Demand Elasticities for Processed Foods in the Presence of Fixed Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(2), pages 1-20, August.
    • Handle: RePEc:ags:jlaare:31108
    DOI: 10.22004/ag.econ.31108
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    10. Ferrier, Peyton & Peterson, Everett E. & Landes, Maurice, 2012. "Specialty Crop Access to U.S. Markets: A Case Study of Indian Mangoes," Economic Research Report 262228, United States Department of Agriculture, Economic Research Service.
    11. Chouinard, Hayley H & Davis, David E. & LaFrance, Jeffrey T. & Perloff, Jeffrey M, 2005. "The Effects of a Fat Tax on Dairy Products," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt60t1f3tn, Department of Agricultural & Resource Economics, UC Berkeley.
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    17. Shewmake, Sharon & Okrent, Abigail & Thabrew, Lanka & Vandenbergh, Michael, 2015. "Predicting consumer demand responses to carbon labels," Ecological Economics, Elsevier, vol. 119(C), pages 168-180.
    18. Bakhtavoryan, Rafael & Capps, Jr., Oral, . "A Demand Systems Analysis for Cheese Varieties Using a Balanced Panel of US-Designated Market Areas, 2018–2020," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 49(2).
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    20. Kehar Singh & Madan M. Dey & Prasanna Surathkal, 2014. "Seasonal and Spatial Variations in Demand for and Elasticities of Fish Products in the United States: An Analysis Based on Market-Level Scanner Data," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(3), pages 343-363, September.
    21. Pasirayi, Simbarashe & Richards, Timothy J., 2023. "Assessing the impact of manufacturer power on private label market share in an equilibrium framework," Journal of Business Research, Elsevier, vol. 154(C).
    22. Yun Fong Lim & Yunzeng Wang & Yue Wu, 2015. "Consignment Contracts with Revenue Sharing for a Capacitated Retailer and Multiple Manufacturers," Manufacturing & Service Operations Management, INFORMS, vol. 17(4), pages 527-537, October.
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    24. Cessna, Jerry & DelCurto, Molly & Terán, Angel & Crouse, Joseph, 2023. "Documentation for the USDA, Economic Research Service Annual U.S. Dairy Sector Econometric Model," Technical Bulletins 338950, United States Department of Agriculture, Economic Research Service.
    25. Chouinard Hayley H & Davis David E & LaFrance Jeffrey T & Perloff Jeffrey M, 2007. "Fat Taxes: Big Money for Small Change," Forum for Health Economics & Policy, De Gruyter, vol. 10(2), pages 1-30, June.

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