Multiproduct Firms' Pricing Behaviour in the Italian Grocery Trade

Multiproduct Firms' Pricing Behaviour in the Italian Grocery Trade This paper investigates the determinants of price dispersion between different goods in grocery retailing, as the result of pricing decisions of multiproduct retailers. Demand parameters are generated using the LES system. These are then used to test theoretical predictions about the nature of supermarkets' pricing and consumers' shopping behaviour using disaggregated data from the Italian grocery trade. The empirical results concerning the supply function provide evidence for the existence, in all types of retail organisation, of a monopolistic form of price discrimination. The results are consistent with discrimination due to the exploitation of customers' switching costs. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Multiproduct Firms' Pricing Behaviour in the Italian Grocery Trade

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Publisher
Springer Journals
Copyright
Copyright © 1997 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1007709700663
Publisher site
See Article on Publisher Site

Abstract

This paper investigates the determinants of price dispersion between different goods in grocery retailing, as the result of pricing decisions of multiproduct retailers. Demand parameters are generated using the LES system. These are then used to test theoretical predictions about the nature of supermarkets' pricing and consumers' shopping behaviour using disaggregated data from the Italian grocery trade. The empirical results concerning the supply function provide evidence for the existence, in all types of retail organisation, of a monopolistic form of price discrimination. The results are consistent with discrimination due to the exploitation of customers' switching costs.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Sep 29, 2004

References

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