Elasticities of substitution between marketing and farm inputs in a complete system of food commodities
Document Type
Article
Publication Date
9-1-2023
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.
Publication Source (Journal or Book title)
Applied Economic Perspectives and Policy
First Page
1450
Last Page
1471
Recommended Citation
Lee, Y., Li, Q., & Çakır, M. (2023). Elasticities of substitution between marketing and farm inputs in a complete system of food commodities. Applied Economic Perspectives and Policy, 45 (3), 1450-1471. https://doi.org/10.1002/aepp.13322