Fast food, addiction, and market power

Timothy Richards, Paul M. Patterson, Stephen F. Hamilton

Research output: Contribution to journalArticlepeer-review

9 Scopus citations

Abstract

Many attribute the rise in obesity since the early 1980s to the overconsumption of fast food. A dynamic model of a differentiated-product industry equilibrium shows that a firm with market power will price below marginal cost in a steady-state equilibrium. A spatial hedonic pricing model is used to test whether fast food firms set prices in order to exploit their inherent addictiveness. The results show that firms price products dense in addictive nutrients below marginal cost, but price products high in nonaddictive nutrients higher than would be the case in perfect competition.

Original languageEnglish (US)
Pages (from-to)425-447
Number of pages23
JournalJournal of Agricultural and Resource Economics
Volume32
Issue number3
StatePublished - Dec 1 2007

Keywords

  • Addiction
  • Brand loyalty
  • Fast food
  • Generalized method of moments
  • Hedonic pricing
  • Nutrients
  • Shadow values

ASJC Scopus subject areas

  • Animal Science and Zoology
  • Agronomy and Crop Science
  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Fast food, addiction, and market power'. Together they form a unique fingerprint.

Cite this