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Richards continues ‘outstanding’ record


December 11, 2008

Timothy Richards, professor and Marvin and June Morrison Chair in Agribusiness at the Morrison School of Management and Agribusiness, has been awarded two “Outstanding Article of the Year” honors in 2008. These recognitions mark the eighth and ninth refereed journal articles authored by Richards, an accomplishment simply unheard of in most academic fields.

His article, titled “Firm-Level Competition in Price and Variety,” received recognition as the Outstanding Journal Article, Southern Agricultural Economics Association in February 2008. The article was published in 2006 in the Journal of Agricultural and Applied Economics and was co-authored with the School’s Dean Paul Patterson.

In this study, Richards looked at the interplay of pricing and product-line decision in the ready-to-eat (RTE) cereal industry.

“While previous theoretical research explored the effects of pricing strategies for new products and the strategic motives for product-line changes, this study focused on the interaction of these approaches in a real-world situation at the firm level, rather than the brand level,” said Richards.

The RTE cereal industry was chosen because of the frequency of new product introductions, estimated by the Food Institute to be nearly 100 new products per year, and the use of strategic new product introduction as a competitive tool.

The data used were from scanner purchases for the top five cereal manufacturers and covered 65 four-week periods in the Baltimore-Washington market. During the sample period these companies sold 224 different cereal brands, with 84 of these being introduced during this time period.

Results showed that when firms were introducing a product, they tended to cooperate with other firms in the pricing of the product in the short term but as the product became more established, the firms began to compete on price.

The second article, titled “Nutrient Consumption and Obesity: A Rational Addiction?,” was recognized as the Western Economic Association International Best Article at its June 2008 conference. Co-authored with Patterson and USDA ERS Branch Chief Abebayaehu Tegene, the article was published in the journal Contemporary Economic Policy in 2007.

This study tested the nutrient rational addiction hypothesis using data for a product category widely believed to contribute to obesity — snack foods. The tested hypothesis maintained that consumers may become addicted to certain nutrients (e.g. fats, carbohydrates, or protein) leading to excess consumption. Snack food, which for this study includes popcorn, corn chips, low and regular fat potato chips, pretzels, puff cheese, tortilla chips, pork rinds, snack meats, cookies, crackers, nuts, carrots, and apples, is also a desirable food category for testing addiction to nutrients because this category exhibits wide variability in nutritional profiles.

Analysis done to simulate the impact of taxes on food products on nutrient consumption emphasized the need to design economic policies in a way that will more carefully target nutrients, instead of foods or food categories. According to Richards, Patterson and Tegene, applying a “sin tax” to certain food items would not be effective, since other snack foods may be substituted.

“For example, a 10 percent tax on pretzels would cause an increase in the total consumption of calories, fat, carbohydrates and sodium,” said Richards. “These results are obtained because potato chips are a strong substitute for pretzels; potato chip consumption would rise if pretzels were taxed.”

The team of researchers proposes a tax on the individual addictive nutrients as an economic strategy to fight against obesity, making high-risk foods more expensive and, therefore, less desirable.

Richards’s research interests relate to issues in strategic marketing and economic performance of the food production system. He is currently involved in projects regarding food safety, invasive species, nutrition and obesity, and imperfect competition in food retailing. While on sabbatical this semester, Richards is interacting with colleagues and engaging in research activities at Kiel University (Germany), Cornell University, University of Wisconsin – Madison, and California Polytechnic State University.

Richards has published more than 50 refereed journal articles and has been awarded numerous research grants from the USDA’s competitive National Research Initiative program as well as from the Risk Management Agency, Rural Business Cooperative Service and Economic Research Service of the USDA and many non-governmental organizations. Richards currently serves on the editorial board of the Journal of Agricultural Economics and has served as associate editor for the American Journal of Agricultural Economics.

Chris Lambrakis, lambrakis@asu.edu
(480) 727-1173
Public Affairs at ASU Polytechnic campus

Michelle Wolfe, michelle.wolfe@asu.edu
Morrison School of Management and Agribusiness