Mangirdas Morkūnas

Lithuanian Institute of Agrarian Economics,

Lithuania

morkunas.mangirdas@gmail.com

Government or invisible hand? Who is in charge of retail food prices? Evidence from the Baltics

Artiom Volkov

Lithuanian Institute of Agrarian Economics,

Lithuania

artiom.volkov@laei.lt

Aistė Galnaitytė

Lithuanian Institute of Agrarian Economics,

Lithuania

aiste.galnaityte@laei.lt

Abstract. The article is aimed at revealing the factors, which influence the retail food prices the most. Not only the main 10 factors influencing retail food prices have been distinguished, but also governments’ capacities to influence food prices have been researched. It has been found that although government can directly influence three (retailer’s concentration level, purchasing power of consumers, state support for growing particular food products) and can partially influence two (production costs and tax burden) of the ten most important factors, influencing retail food prices, its influence on retail prices is quite considerable, as the free market principles are still prevailing in food prices. Therefore, governments’ intentions to make food more affordable to its citizens have only limited potential for success.

Received: February, 2019

1st Revision: May, 2019

Accepted: September, 2019

DOI: 10.14254/2071-8330.2019/12-3/12

JEL Classification: D47, D49

Keywords: food, government, retail prices, the Baltics