Greg,
Thanks for such a thoughtful post. In my own comments about food prices, the neighborhood I described was very, very, poor. At most, 1/2 the people there had cars, and not all of those were running.
Question for you on your bit about the higher costs of food distribution. You said that it would cost more to distribute food to smaller, more urban stores. I assume you're referring to the labor costs. Wouldn't the costs even out when it takes longer to get from supermarket to supermarket in suburban areas if individual distributors (i.e., Del Monte or Tropicana) are involved? Or, if product is being delivered from a central warehouse owned by the supermarket, wouldn't the costs of maintaining it drive up prices? Seems like transportation-related costs would be the same in suburban or urban settings. It's stop and go traffic in both.
YOu mentioned that seeing an "oligopolistic conspiracy" would not be enough to explain the higer prices. I wouldn't use the word conspiracy, but it seems pretty obvious to me that people open inner-city corner grocery stores knowing beforehand that they have a capitive market. That means they can do things, price-wise, that they'd never get away with if residents had the option of shopping elsewhere.
Frances
On Tue, 18 Aug 1998, Greg Nowell wrote:
> Second: considerations on food. Do we mean the poor or
> the very poor. The very poor cannot afford vehicles.
> Their carrying capacity is limited to what they can
> lug, usually a few blocks. This tends to lead to a
> large number of small outlets with low volume. Because
> of the low volume these outlets go for the "high value
> added" food items with long shelf-lives and which
> incidentally are high-sugar and high-fat, adding
> addictive properties to their long shelf-lives and lack
> of nutrition. Due to the higher inefficiencies of
> more localized distribution you get higher prices. To
> some extent these higher prices have to be measured
> against the cost of owning a vehicle. I also suspect
> that the difficulties of distribution (slow traffic
> speeds) increase costs of distribution relative to
> lower density suburbs. But to some extent we should
> "expect" higher food costs in these situations since
> the real "penalty" is that the inability to own and
> operate a car gets built into the food price structure
> in areas where there are many such people. I expect
> that this result is "rational" in the sense that
> ceteris paribus the transportation penalty is less than
> the real cost of owning and operating a car. But it
> does have the effect of altering prices and sale
> volumes of particular kinds of foods, which probably
> then channels consumption into canned high-salt high
> fat stews, etc.