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Modelling Price Dispersion as an Outcome of Competition in the Irish Grocery Market

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  • Patrick Paul Walsh
  • Ciara Whelan

Abstract

The paper empirically models price dispersion between related brands within product categories of the Irish Independent Grocery market. Retail brand prices are averaged over the independent shops stocking the brand. Since individual brands are retailed through different groups of shops, brands are priced over heterogeneous consumer segments. Brand price dispersion is estimated to increase with competition when conditioned on brand distribution structures, while controlling for other observed and unobserved deterministic factors. The data suggest that brand pricing across consumer groups induce varying degrees of localised price competition rather than pricing across segments to extract consumer willingness to pay.

Suggested Citation

  • Patrick Paul Walsh & Ciara Whelan, 1999. "Modelling Price Dispersion as an Outcome of Competition in the Irish Grocery Market," Journal of Industrial Economics, Wiley Blackwell, vol. 47(3), pages 325-343, September.
    • Handle: RePEc:bla:jindec:v:47:y:1999:i:3:p:325-343
    DOI: 10.1111/1467-6451.00103
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    Cited by:

    1. Anindya Ghose & Yuliang Yao, 2011. "Using Transaction Prices to Re-Examine Price Dispersion in Electronic Markets," Information Systems Research, INFORMS, vol. 22(2), pages 269-288, June.
    2. Ben Lakhdar, Christian & Leleu, Hervé & Vaillant, Nicolas Gérard & Wolff, François-Charles, 2013. "Efficiency of purchasing and selling agents in markets with quality uncertainty: The case of illicit drug transactions," European Journal of Operational Research, Elsevier, vol. 226(3), pages 646-657.
    3. Sibley, Christopher W. & Walsh, Patrick Paul, 2002. "Earnings Inequality and Transition: A Regional Analysis of Poland," IZA Discussion Papers 441, Institute of Labor Economics (IZA).
    4. Balaguer, Jacint & Pernías, José C., 2013. "Relationship between spatial agglomeration and hotel prices. Evidence from business and tourism consumers," Tourism Management, Elsevier, vol. 36(C), pages 391-400.
    5. Jacint Balaguer Coll & José C. Pernías, 2010. "Spatial density, average prices and price dispersion. Evidence from the Spanish hotel industry," Working Papers. Serie EC 2010-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    6. Raymundo M. Campos-Vázquez & Eduardo M. Medina-Cortina, 2019. "Pass-through and competition: the impact of soft drink taxes as seen through Mexican supermarkets," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-23, December.
    7. Patrick Paul Walsh & Franco Mariuzzo & Ciara Whelan, 2005. "Merger Control in Differentiated Product," Trinity Economics Papers 2000510, Trinity College Dublin, Department of Economics.
    8. Tamás Sebestyén & Balázs Szabó, 2022. "Market interaction structure and equilibrium price heterogeneity in monopolistic competition," Netnomics, Springer, vol. 22(2), pages 259-282, October.
    9. Franco Mariuzzo & Patrick Paul Walsh & Ciara Whelan, 2004. "EU Merger Control in Differentiated Product Industries," CESifo Working Paper Series 1312, CESifo.
    10. Ya-Ling Chiu & Jiangze Du & Jying-Nan Wang, 2022. "The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel Analysis," SAGE Open, , vol. 12(3), pages 21582440221, August.
    11. Mariuzzo, Franco & Walsh, Patrick Paul & Whelan, Ciara, 2010. "Coverage of retail stores and discrete choice models of demand: Estimating price elasticities and welfare effects," International Journal of Industrial Organization, Elsevier, vol. 28(5), pages 555-578, September.
    12. Franco Mariuzzo & Patrick Paul Walsh & Ciara Whelan, 2003. "Firm Size and Market Power in Carbonated Soft Drinks," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 23(3_4), pages 283-299, December.
    13. Joshua Sherman & Avi Weiss, 2017. "On Fruitful And Futile Tests Of The Relationship Between Search And Price Dispersion," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 1898-1918, October.
    14. Bernd Jost, 2012. "Price Dispersion, Search Costs and Spatial Competition: Evidence from the Austrian Retail Gasoline Market," NEURUS papers neurusp166, NEURUS - Network of European and US Regional and Urban Studies.
    15. Patrick Paul Walsh & Franco Mariuzzo, 2005. "Embedding Consumer Taste for Location into a Structural Model of Equilibrium," Trinity Economics Papers 200053, Trinity College Dublin, Department of Economics.
    16. Caulkins, Jonathan P. & Baker, David, 2010. "Cobweb dynamics and price dispersion in illicit drug markets," Socio-Economic Planning Sciences, Elsevier, vol. 44(4), pages 220-230, December.
    17. Sebnem Bahadir-Lust & Jens-Peter Loy & Christoph R. Weiss, 2007. "Are they always offering the lowest price? An empirical analysis of the persistence of price dispersion in a low inflation environment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 777-788.
    18. Barron, John M. & Umbeck, John R. & Waddell, Glen R., 2008. "Consumer and competitor reactions: Evidence from a field experiment," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 517-531, March.
    19. Barron, John M. & Taylor, Beck A. & Umbeck, John R., 2004. "Number of sellers, average prices, and price dispersion," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1041-1066, November.
    20. Noel, Michael D. & Qiang, Hongjie, 2019. "The role of information in retail gasoline price dispersion," Energy Economics, Elsevier, vol. 80(C), pages 173-187.

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