24 REDUCING MARKET DISTORTIONS FOR A MORE PROSPEROUS UKRAINE 40 considered “socially important,” yet a cross-country empirical analysis indicates that basic food products in Ukraine cost as much as 50 percent more than they do in OECD countries.41 The di昀昀erences in the average prices for key food products in Ukraine vis-à-vis its comparators may indicate a lack of competition in certain food-product markets. While prices for chicken and eggs are broadly similar to those of comparator countries, which may re昀氀ect relatively robust competition from EU producers in the Ukrainian poultry market, Ukrainian households appear to pay signi昀椀cantly more for milk, onions, oranges, tomatoes, wheat bread, and white rice than do households in comparable OECD countries and regional peers (Table 1). Industrial associations, such as the Dairy Alliance and the Food and Vegetables Association, operate in many of these markets, and higher prices may indicate the 42 presence of price or market-sharing agreements, with negative implications for consumers. in addition, a comparison of food prices in key cities reveals that residents of Kiev, Ukraine’s capital, pay about 40 percent more, on average, for basic food items than do residents of similar cities in the OECD and regional comparator countries. The results of the city-level analysis remain robust when using alternative datasets that include other major Ukrainian cities like Dnipropetrovsk, Kharkiv, Lviv, Odessa, and Sumy. A domestic price comparison shows that food prices were about 13 percent higher in Kiev than in other Ukrainian provinces between March 2014 and December 2017, even after controlling for demand drivers (e.g., population and disposable income) and cost drivers (e.g., labor and transportation costs).43 Oligarchs dominate several of Ukraine’s major food-product markets. These include chicken, eggs, rice, and sugar. While chicken and egg prices are broadly in line with those of comparable coun- 44 tries, the average Ukrainian prices for rice and sugar appear to be signi昀椀cantly higher. 40 Food products classi昀椀ed as socially important include 昀氀our, bread, pasta, cereals, sugar, beef, pork, poultry, sausage products, milk, cheese, sour cream, butter, sun昀氀ower oil, and buckwheat meal. See http://artlife.rv.ua/?area=ukrainian-news/31139 41 The Numbeo database includes data for 35 OECD countries (Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, South Korea, Latvia, Luxembourg, Mexico, The Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Swit- zerland, Turkey, the United Kingdom, and the United States) and 7 additional regional comparators (Bulgaria, Croatia, Georgia, Kazakhstan, Lithuania, Moldova, and Romania). The EIU database includes data for 32 OECD countries (Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, South Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Swit- zerland, Turkey, the United Kingdom, and the United States) and 3 additional regional comparators (Bulgaria, Kazakhstan, and Romania). The analysis considers di昀昀erences in demand and cost factors impacting prices such as income per capita, import costs, and tari昀昀 rates, and all speci昀椀cations are included in Table A.1 in the Annex. The results are generally robust to the inclusion of additional regional peers (see Table B.1 in the Annex). While the analysis uses purchasing-power parity conversion rate, the results remain robust when the market exchange rate is used (see Tables C.1 and D.1 in the Annex). 42 An in-depth competition assessment could analyze market dynamics and gauge the risk of anticompetitive outcomes. 43 The analysis uses food-price data from the World Food Program for 23 basic food products: beef, beetroots, buckwheat meal, butter, cabbage, carrots, chicken, curds, eggs, pasteurized milk, mixed sausage, onions, pasta, pork, potatoes, rye bread, salted pork fat (salo), sour cream, sun昀氀ower oil, white bread, white 昀氀our, white rice, and white sugar. For the full speci昀椀cations, see Tables A.2, B.2, and C.2 in the Annex. Price dispersion across Ukrainian provinces is generally low for the food products analyzed, but some products such as salo, cabbage, and potatoes exhibit greater price dispersion (see Figure A.4 in the Annex). 44 For all speci昀椀cations, see Table A.3 in the Annex.