Economic Impacts of the 'Buy Local' Trend

Susweta Ray, Konstantinos Giannakas
2021 unpublished
Buying local food products has become particularly popular in recent years due to a perceived freshness and superior quality of these products and the 'Buy Local' trend's potential to support the local community. This paper develops a novel framework of heterogeneous consumers and producers to analyze the market and welfare impacts of the 'Buy Local' trend and determine whether the trend is serving its purpose. In particular, the study determines the impacts of the trend on equilibrium prices
more » ... d quantities in the locality and the welfare of the interest groups involved (i.e., consumers and producers of local and non-local products affected by the trend). Analytical results show that 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 a large importing locality, 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.
doi:10.22004/ag.econ.314000 fatcat:qca5jzmkebhvbkh6sptmicarnq