Department of Resource Economics
The food industry is being transformed by two important changes. It has recently been characterized by rising concentration, partly due to a number of large mergers since the beginning of the new millennium. In addition, the advent of the internet is affecting the source of advertising and the method of purchase for many food products. Firms in the industry must devise strategies to adapt to and capitalize on these changes that have the potential to affect market structure and performance.
The food industry is under transformation due to some important changes in consumer preferences. With a trend towards a healthier lifestyle, food quality, nutrition, and safety are increasingly important to consumers today. There is an increasing demand for more information about the nutritional content of food, for food considered healthy and health-enhancing. However, at the same time, obesity and diabetes rates continue to rise and so do health care costs as a result.
We will develop a mathematical model that predicts how farmers (or firms) will make decisions when choosing between two markets. The markets we will study include a wholesale market, where farmer's products are no different from all other farmers, and a farm-to-school market where the farmer's products are differentiated (the farmer is known and the products are known to be locally produced). We will then design economic experiments that could be used to test the model's theoretical results.