Elasticities of substitution between marketing and farm inputs in a complete system of food commodities

Youhong Lee, Qingxiao Li, Metin Çakır

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

The elasticities of substitution between marketing and farm inputs are important for modeling the shape of derived demand and understanding the market structure in the food market. Wohlgenant develops a theoretical framework and finds significant substitution between marketing and farm inputs. The estimates in Wohlgenant have been widely used in economic studies on the US food market, and in this paper, we replicate the results, perform robustness checks, and update the estimates using recent data. Despite minor discrepancies, we are able to replicate most of the results in Wohlgenant and maintain robust estimates when we apply ridge regression. Using updated data, we calculate new estimates of the elasticities and find that marketing firms have become less competitive. We discuss important market trends in recent years and highlight potential venues for future research.

Original languageEnglish (US)
Pages (from-to)1450-1471
Number of pages22
JournalApplied Economic Perspectives and Policy
Volume45
Issue number3
DOIs
StatePublished - Sep 2023

Bibliographical note

Publisher Copyright:
© 2022 Agricultural & Applied Economics Association.

Keywords

  • demand interrelationships
  • food
  • input substitution
  • marketing margins
  • replication

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