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Comment by bachmeier | Hacker News Reader

Interesting seeing this posted, as I'm one of the authors. The citation of the eventually published paper is here[0].

My coauthors are the experts on beef markets. They asked me to join for the econometrics. Possibly of interest to programmers is that this paper got me started using the D programming language. I needed something that was fast and easy to interoperate with R. Been using it since.

[0] Pozo, Veronica F., Lance J. Bachmeier, and Ted C. Schroeder. "Are there price asymmetries in the US beef market?." Journal of Commodity Markets 21 (2021): 100127.

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Not a fan of how verbose and hedge-y the paper is, but I guess thats academia.

In plain English, the question is "Are beef middlemen ripping off customers? (On purpose or through asymmetric laziness)"

and the answer is "No! (Actually they try to, but people don't fall for it)."

Yeah?

you speak too plainly ahahah, academics don't like it.

That's a reasonable summary of the motivation behind the literature. If we have this kind of asymmetry, it's because consumers are getting ripped off, is how the argument usually goes.

I think it's important to recognize that if consumers are temporarily buying lower quality beef, they're still hurt (but probably not enough that anyone cares).

So, basically, there are price assymmetries (BLS sticker price data), but consumers adjust the mix of cuts of beef they buy in favor of cheaper cuts (scanner data) so the overall effect is to produce something that looks like symmetry?

That's right. It matters if you're talking about "price" as the price on the product or the price consumers pay.

How does product substitution work in practice given that a cow has fixed anatomy?

If a farm price shock leads to a BLS sticker price increase, but consumers buy $10 of chuck instead of $10 filet mignon, where do the filets go?

If price transfers are symmetric, does this mean there is a time after the same shock where customers are substituting the inverse?

Presumably the meat packers can't hold the filets in inventory indefinitely

I asked my coauthors this question when they asked me to join. Consumer beef purchases are only one of the markets. If there's a reduction in the amount of beef on the market, that might be absorbed at the high end by consumers, so that others (particularly restaurants) continue to get the good cuts. Consumers substitute into product that would otherwise be used for something like hot dogs.

That's a fascinating and complex system. That suggests that restaurant consumption is relatively fixed as well but quality of cut is flexible at the lower margin. I wonder if there's any way to analyze the whole picture. I suppose that would require insight into the total sales of processors, which may or may not be proprietary

I also wonder if the quality adjusted analysis for Consumer consumption would show a different price sensitivity to shock for high-end cuts in the market

Any preferred data sources you have for these analysis?

Well done

Sorry. This is the only paper I wrote on the topic, and my coauthors had already constructed the data when they brought me aboard.

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