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Getting Something from Nothing: An Investigation of Beef Demand Expansion and Substitution

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  • Michael A. Gunderson
  • Jayson L. Lusk
  • F. Bailey Norwood

Abstract

A relative increase in demand for one type of beef can have one of two potentially countervailing effects: it can cause substitution of one type for another and/or it might expand overall demand. The results of a random parameters logit analysis indicate that regardless of whether USDA Choice or upgraded steak demand increases, the expansion effect dominates the substitution effect. We also show that, for our sample of consumers, the introduction of a new "natural" steak causes a greater reduction in market share for USDA Choice beef than ungraded beef. Despite this result, however, overall steak demand increases.

Suggested Citation

  • Michael A. Gunderson & Jayson L. Lusk & F. Bailey Norwood, 2009. "Getting Something from Nothing: An Investigation of Beef Demand Expansion and Substitution," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(1), pages 68-87.
    • Handle: RePEc:oup:revage:v:31:y:2009:i:1:p:68-87.
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    File URL: http://hdl.handle.net/10.1111/j.1467-9353.2008.01426.x
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    References listed on IDEAS

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    1. Jayson L. Lusk & Ted C. Schroeder, 2004. "Are Choice Experiments Incentive Compatible? A Test with Quality Differentiated Beef Steaks," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 467-482.
    2. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
    3. Julian M. Alston & John W. Freebairn & Jennifer S. James, 2001. "Beggar-Thy-Neighbor Advertising: Theory and Application to Generic Commodity Promotion Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 888-902.
    4. Dhar, Tirtha & Foltz, Jeremy D., 2004. "Milk by Any Other Name... Consumer Benefits from Labeled Milk," Working Papers 201547, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    5. Michael K. Wohlgenant, 1993. "Distribution of Gains from Research and Promotion in Multi-Stage Production Systems: The Case of the U.S. Beef and Pork Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 642-651.
    6. Louviere,Jordan J. & Hensher,David A. & Swait,Joffre D. With contributions by-Name:Adamowicz,Wiktor, 2000. "Stated Choice Methods," Cambridge Books, Cambridge University Press, number 9780521788304.
    7. Jayson L. Lusk & Darren Hudson, 2004. "Willingness-to-Pay Estimates and Their Relevance to Agribusiness Decision Making," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 26(2), pages 152-169.
    8. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555.
    9. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
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    Cited by:

    1. Leonardo Casini & Nicola Marinelli & Gabriele Scozzafava, 2013. "Distribuzione organizzata vs. negozio specializzato: uno studio sulle preferenze del consumatore italiano di carne bovina," Economia agro-alimentare, FrancoAngeli Editore, vol. 15(1), pages 157-181.
    2. Scozzafava, Gabriele & Casini, Leonardo & Marinelli, Nicola, 2012. "Modern Distribution vs. Specialised Shop: a Study on beef consumer behaviour," 2012 XX Convegno Annuale SIEA, Siracusa, Italy 130448, Italian Society of Agri-food Economics/Società Italiana di Economia Agro-Alimentare (SIEA).

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