Owner Motivations in the UK Speciality Food Sector

This paper investigates empirically whether owner motivations are consistent with neoclassical models of profit m aximisation. Contrary to the neoclassical model, in some markets owners gain pri vate benefits from supplying products with certain characteristics. To consider this issue, a full theoretical model that allows owners to consider not only profi t, but also utility, in their choices of price, product quality, and the use of a n owner-specific production method was developed. Information was gathered on owner motivations from the UK speciality food sector to test the propositions of the theoretical model. Evidence of systematic utility maximisation is foun d and utility maximising owners set higher profit maximising prices and prod uce a higher quality product. These findings have implications for the UK special ity food sector. March 2007