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Markup pricing in the context of a violent conflict: differentiated apples in Hebron wholesale market

Author

Listed:
  • Ihle, Rico
  • Finkelshtain, Israel
  • Rubin, Ofir David

Abstract

We investigate whether hostile international relations in the framework of the ongoing Israeli-Palestinian conflict has an effect on pricing and consumption patterns of different varieties of apples marketed in Palestine. For this purpose, we employ a discrete choice equilibrium model with product differentiation. Results suggest that the intensity level of the conflict has a positive (negative) effect on demand (price elasticity and markups). It is plausible that in times of uncertainty transactions are larger as producers have higher incentive to sell their stock and consumers prefer to accumulate food to avoid risk that violence and security measures will impede trade.

Suggested Citation

  • Ihle, Rico & Finkelshtain, Israel & Rubin, Ofir David, 2014. "Markup pricing in the context of a violent conflict: differentiated apples in Hebron wholesale market," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182657, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae14:182657
    DOI: 10.22004/ag.econ.182657
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    References listed on IDEAS

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    1. Chaim Fershtman & Neil Gandal, 1998. "The Effect of the Arab Boycott on Israel: The Automobile Market," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 193-214, Spring.
    2. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    3. Ihle, Rico & Rubin, Ofir D., 2013. "Consequences of unintended food policies: Food price dynamics subject to the Israeli–Palestinian conflict," Food Policy, Elsevier, vol. 42(C), pages 96-105.
    4. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
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    Demand and Price Analysis;

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