Who Gets the Dough? Explaining the Gluten Free Price Premium

Abstract

Gluten-free (GF) food products are substantially more expensive than their conventional counterparts, raising concerns about inequality for individuals with coeliac disease and gluten intolerance. This paper decomposes that premium into its underlying economic causes. Focusing on the GB bread market - where GF products are 4 times as expensive, per kilogram, as conventional bread - I estimate a structural discrete-choice demand model. I use weekly household-level scanner data on bread purchases between 2017 and 2019, covering over 27,000 households and 3.3 million shopping occasions. Marginal costs are recovered under the assumption of multiproduct Bertrand–Nash competition. Preliminary results indicate that own-price elasticity of demand is similar between gluten-free and regular bread. Calculating mark-ups and recovering marginal costs reveals that the gluten-free price premium is almost entirely explained by higher marginal costs. High gluten-free prices therefore appear to reflect the cost of supply rather than price discrimination, with direct implications for the design of policy interventions aimed at improving affordability.

Rhys J. Williams

PhD Candidate

Rhys is a doctoral candidate in Economics at the University of Cambridge. His research interests are in applied microeconomics, with a focus on competition and health questions.