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Applied Spatial Analysis and Policy

, Volume 12, Issue 3, pp 547–566 | Cite as

Does the Urban Population Pay More for Food? Implications in Terms of Poverty

  • Elena Lasarte Navamuel
  • Fernando Rubiera MorollónEmail author
  • Esteban Fernandez Vázquez
Article
  • 68 Downloads

Abstract

The relation between urban agglomeration and final food consumer prices is controversial. Pressure over the land in large cities results in higher prices in general and for feeding products in particular. On the other hand, large cities provide greater competition among firm, which might drop prices down. Previous literature studying this issue was mainly focused on developing countries, finding empirical evidence of higher food costs in large urban concentrations. Such evidence is missing, however, for developed countries. In this paper, we are interested in measuring the differences in the cost of food products among several city sizes for the case of Spain. A comparison that applies a standard price index would not be appropriate because it would ignore consumer substitution capacity. To make a proper comparison, a “true” food products costs index should be obtained. We have estimated a demand system for food products consumed by Spanish households to measure their costs in cities of different sizes across Spain and over the recent period 2008–2015. The data come from the Spanish Household Budget Survey (HBS). We found that the cost of attaining a given level of utility in food consumption is greater in the largest cities. Additionally, as an example of the political implications of this analysis, we analyze the effect over the quality of life by adjusting the poverty lines with our index and observe that the poverty rates of the largest urban areas in a developed country, such as Spain, might be substantially underestimated if differences in cost of living are not taken into account.

Keywords

City size Food products costs Almost ideal demand systems (AIDS) Poverty Urban economics and Spain 

JEL Classification

D12 Q11 Q18 and R22 

Notes

Compliance with Ethical Standards

Informed Consent

Informed consent was obtained from all individual participants included in the study.

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Copyright information

© Springer Science+Business Media B.V., part of Springer Nature 2018

Authors and Affiliations

  1. 1.University of ExtramaduraCaceresSpain
  2. 2.REGIOlab - Regional Economics LaboratoryUniversity of OviedoOviedoSpain

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