Natural experiment analyzes the 1974 sugar shortage's impact on presweetened cereal prices, showing significant price elasticity.
Following the 1974 sugar shortage prices of presweetened cereal rose by 24% in nine months. This natural price experiment is analyzed to illustrate how events of this type can be used to estimate price elasticity. The results show a relatively high price elasticity for presweetened cereals compared to the cereal category as a whole.
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Neslin et al. (1983) studied this question.
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