Demand, Information, and Competition: Why Do Food Prices Fall at Seasonal Demand Peaks?

Posted: 20 Nov 2000

See all articles by James M. MacDonald

James M. MacDonald

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Abstract

Prices for seasonal food products fall at demand peaks. Price declines are not driven by falling agricultural input prices; indeed, farm to retail margins narrow sharply. I use electronic scanner data from a sample of US supermarkets to show that seasonal price declines are closely linked to market concentration, and are much larger in markets with several rivals than where a single brand dominates. Seasonal demand increases reduce the effective costs of informative advertising, and increased informative advertising by retailers and manufacturers in turn may allow for increased market information and greater price sensitivity on the part of buyers.

Suggested Citation

MacDonald, James M., Demand, Information, and Competition: Why Do Food Prices Fall at Seasonal Demand Peaks?. The Journal of Industrial Economics, Vol. 48, Issue 1, March 2000. Available at SSRN: https://ssrn.com/abstract=242009

James M. MacDonald (Contact Author)

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
(202) 694-5610 (Phone)

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