Food Donations, Retail Operations, and Retail Pricing

业务 定价 竞赛(生物学) 营销 质量(理念) 农业 定价策略 捆绑 经济 产业组织 微观经济学 生态学 生物 认识论 哲学 共谋
作者
John Lowrey,Timothy J. Richards,Stephen F. Hamilton
出处
期刊:Manufacturing & Service Operations Management [Institute for Operations Research and the Management Sciences]
卷期号:25 (2): 792-810 被引量:20
标识
DOI:10.1287/msom.2022.1185
摘要

Problem definition: For grocery retailers, managing perishable food that is nearing expiry is a major challenge. Donating food to food banks is socially responsible, as it improves local communities and reduces waste generation. It also diverts food to a secondary, quality-differentiated market. Academic/practical relevance: In this paper, we quantify the economic impacts of this secondary market for food by examining donation and pricing behaviors for competing retailers. Methodology: We use a structural model of price-discriminating oligopoly retailers to study the effect of food donations on store and category-level demand and equilibrium prices. Empirically, we estimate the food donation effect using a unique data set of food donations and sales for several categories of perishable foods across two major retail chains that compete in the same market. Results: The competitive effects of food donations follow from the price-discrimination logic. First, food donations create a direct demand effect. Donations raise the average quality of products on display, shifting demand curves inward and rotating them clockwise (e.g., more inelastic). Second, food donations create a market enhancement effect, softening price competition and raising equilibrium prices among competing retailers. Managerial implications: Food donations increase food prices and store profits, tying the socially responsible option to an economic benefit. This study contributes a new type of reuse operation to the literature on closed-loop supply chains. Funding: Funding from the Agriculture and Food Research Initiative (National Institute for Food and Agriculture, U.S. Department of Agriculture) [Grant 2020-67021-31377] is acknowledged. Supplemental Material: The online supplement is available at https://doi.org/10.1287/msom.2022.1185 .
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