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Evaluating food retailers using dual elasticities of substitution

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  • Timothy Park
  • Johannes Sauer

Abstract

Dual elasticities of substitution from a distance function model of the food retailing establishment are developed based on multiple performance measures integrated with store characteristics, staffing decisions, and employee benefits and incentives. The impacts of organizational and competitive conditions such as store format, membership in a self-distributing chain, and the presence of a supercenter on store management decisions are evaluated. Technical substitution relationships implied by the dual Morishima elasticities confirm that moderate changes in relative shadow factor prices are associated with input adjustments in retail operations, implying that the costs of adjusting input allocations are small. Both value added and service offerings decline in the presence of a supercenter, with food retailers relying on price adjustments as a primary strategy. Copyright Springer Science+Business Media, LLC (outside the USA) 2013

Suggested Citation

  • Timothy Park & Johannes Sauer, 2013. "Evaluating food retailers using dual elasticities of substitution," Journal of Productivity Analysis, Springer, vol. 39(2), pages 111-122, April.
    • Handle: RePEc:kap:jproda:v:39:y:2013:i:2:p:111-122
    DOI: 10.1007/s11123-012-0279-x
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    More about this item

    Keywords

    Food retailing; Dual Morishima elasticity of substitution; Input distance function; L25; L81; J24;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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