Journal
EUROPEAN REVIEW OF AGRICULTURAL ECONOMICS
Volume 47, Issue 5, Pages 1861-1896Publisher
OXFORD UNIV PRESS
DOI: 10.1093/erae/jbaa012
Keywords
retail prices; food retailing; food waste; price discrimination
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Funding
- Agricultural and Food Research Initiative (National Institute for Food and Agriculture, USDA) [2016-09900]
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We examine a food retailer's incentive to use a minimum quality standard as part of a quality-based price-discrimination strategy and show how price discrimination can result in a substantial level of retail food waste. Using data from a major US food retailer, we estimate a structural model of retail price discrimination and conduct a series of counter-factual experiments to demonstrate that observed retail prices are consistent with quality-based price discrimination in the retail market. Our findings indicate that quality standards on fresh produce can explain a substantial proportion (7.5%) of food waste by retailers in the US.
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