Air Pollution and Retail Vegetable Market Prices: Empirical Evidence from Korea

Abstract Air pollution can lead to people engaging in avoidance actions. People may limit their time spent outdoors to minimize the health hazards linked with air pollution. Consequently, when severe air pollution causes these behavioral changes, both outdoor and indoor stores may experience the impacts of air pollution. This study estimated the impact of air pollutant on retail vegetable prices (i.e., the total impact of air pollutants on the demand and supply of vegetables) for large discount stores, supermarkets, department stores, and traditional markets in Korea. To this end, we examine the weekly data of 590 Korean retailers during the period from 2015 to 2019, employing both static and dynamic panel approaches. The results indicate that an increase in air pollutants, such as particulate matter, carbon monoxide, nitrogen dioxide, sulfur dioxide, would lead to a decrease in vegetable prices in the short run and the long run across all types of stores we considered, meaning that deteriorating air pollutant levels could potentially result in decreases in vegetable prices not only in outdoor stores but also in indoor stores. Therefore, we suggest that initiatives to reduce air pollution and improve air quality should be further strengthened to prevent the adverse effects of air pollution on the food market.