A conceptual clarification of the sources and meaning of cross-sectional price variability is used to motivate a theoretical and econometric framework for the estimation of cross-sectional demand functions. Quality effects are distinguished from supply-related price variability to identify cross-sectional demand for disaggregated food commodities. An empirical application using data from the 1977-78 Nationwide Food Consumption Survey indicates that parameter differences resulting from a failure to adjust cross-sectional prices for quality effects are likely to be small for relatively homogenous, disaggregated food commodities.

Using scanner data, we estimated demand for nine nonalcoholic beverages under habit formation. We found strong evidence for habit formation. Although demand for sugar-sweetened beverages by lowincome households is less elastic to own-price changes compared with high-income households, there is evidence that high-income households consider beverages to be more substitutable than low-income households do. A half-cent per ounce tax on store-purchased sugar-sweetened beverages will result in a moderate reduction in consumption of sugar-sweetened beverages for both income strata. Because of habit formation, long-run national tax revenue from a sugar-sweetened beverage tax is about 15 to 20% lower than short-run revenue.

Demand interrelationships for farm outputs that are theoretically consistent with consumer demand and marketing group behavior provide important linkages between retail and farm prices. A conceptual model, based on reduced-form specifications for retail and farm prices, is formulated and applied empirically to a set of eight disaggregated food commodities. This approach circumvents the need for retail quantities, which are frequently unavailable for disaggregated food commodities. The results are consistent with theory and generally indicate significant substitution between farm and marketing inputs. Except for poultry, derived demand elasticities are at least 40% larger compared to those derived assuming fixed proportions.

A producer-financed program that leads to either an increase in retail demand from promotion ora decrease in marketing costs from research will generate returns to producers that are generally smaller than returns generated through an equivalent change in producer supply from research. The distribution of gains depends on the degree of substitutibility between farm and nonfarm inputs. Comparative statics of equal absolute changes in demand, supply, and marketing costs in the U.S. beef and pork industries show the significance of input substitutibility for dist¡ of gains, and sensitivity of the results to beef and pork demand interrelationships. discussions on the topic.Review coordinated by Richard Adams.mand curve, compared to benefits derived from research, which shift input supply curves. While research activities may enhance demand through quality improvement, for the present purpose such effects are included with promotion so that attention can focus on the distributional effects of demand shifts versus supply shifts. Significant policy implications may be drawn by comparing the distribution of gains from research and promotion. Many commodity groups have check-off programs which provide funds for allocation between promotion and research. Indeed, for some commodities (e.g., dairy, beef, pork) the lion's share of the check-off funds goes for promotion. An understanding of the tradeoff between returns from promotion versus research is, therefore, essential to decisions regarding allocation of check-off funds between these activities.The main finding of this analysis is that producers should not be indifferent between spending funds on promotion and spening funds on research. A producer-financed program that leads to an upward shift in retail demand will generate returns to producers that are generally smaller than returns generated through shifting the producer supply curve downward by the same amount. Moreover, because returns to producers from equal reductions in processing and disAmer.

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