An Economic Analysis of the ‘Buy Local’ Trend

AAEA member release new research in JAAEA

A new study released, systematically analyzes the system-wide market and welfare impacts of the trend by explicitly accounting for the empirically relevant heterogeneity in consumer preferences for local and non-local products and producer agronomic characteristics (like their efficiency in producing the different products). The explicit consideration of consumer and producer heterogeneity enables the determination of the impacts of the ‘Buy Local’ trend on the different consumers and different producers affected by this trend.  

In the new article “An Economic Analysis of the ‘Buy Local’ Trend”, published in the Journal of the Agricultural & Applied Economics Association, Susweta Ray from Grainger and Konstantinos Giannakas from the University of Nebraska-Lincoln, find out how the increasingly popular “Buy Local” trend affects the prices and quantities/market shares of local and non-local products as well as the welfare of the interest groups involved.

The authors say “The market and welfare impacts of the ‘Buy Local’ trend depend on the size of the locality and whether the locality is an exporter or an importer of the products in question. For instance, while the trend benefits both consumers and producers of large exporting and importing localities, it leaves producers of small exporting localities unaffected. The presence of the trend in large localities affects also outside consumers and producers with the impact on their welfare depending on whether the large locality is an importer or an exporter of the goods in question.”

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ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 60 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes three journals, the Journal of the Agricultural and Applied Economics Association (an open access journal), the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices and the online open access publication series Applied Economics Teaching Resources. To learn more, visit www.aaea.org.

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