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Demand, Information, and Competition: Why Do Food Prices Fall at Seasonal Demand Peaks?

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Author Info
MacDonald, James M
Abstract

Prices for seasonal food products fall at demand peaks. Price declines are not driven by falling agricultural input prices; indeed, farm to retail margins narrow sharply. I use electronic scanner data from a sample of US supermarkets to show that seasonal price declines are closely linked to market concentration, and are much larger in markets with several rivals than where a single brand dominates. Seasonal demand increases reduce the effective costs of informative advertising, and increased informative advertising by retailers and manufacturers in turn may allow for increased market information and greater price sensitivity on the part of buyers. Copyright 2000 by Blackwell Publishing Ltd

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Industrial Economics.

Volume (Year): 48 (2000)
Issue (Month): 1 (March)
Pages: 27-45
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Handle: RePEc:bla:jindec:v:48:y:2000:i:1:p:27-45

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821

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  1. Li, Lan & Carman, Hoy F. & Sexton, Richard J., 2006. "Grocery Retailer Pricing Behavior for California Avocados with Implications for Industry Promotion Strategies," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25494, International Association of Agricultural Economists. [Downloadable!]
  2. Georges Tanguay & Gary Hunt & Nicolas Marceau, 2005. "Food Prices and the Timing of Welfare Payments: A Canadian Study," Canadian Public Policy, University of Toronto Press, vol. 31(2), pages 145-160, June. [Downloadable!] (restricted)
  3. Li, Lan & Carman, Hoy F. & Sexton, Richard J., 2008. "Countercyclical Price Movements during Periods of Peak Demand: Evidence from Grocery Retail Price for Avocados," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6251, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  4. Winfree, Jason A. & McCluskey, Jill J. & Mittelhammer, Ron C. & Gutman, Paula, 2004. "Seasonal Oligopoly Power In The D'Anjou Pear Industry," Journal of Food Distribution Research, Food Distribution Research Society, vol. 35(02), July. [Downloadable!]
  5. Lach, Saul, 2005. "Immigration and Prices," CEPR Discussion Papers 5083, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. Richards, Timothy, 2005. "A Nested Logit Model of Strategic Promotion," 2005 Annual meeting, July 24-27, Providence, RI 19336, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  7. Loreto Lira, 2007. "Why Do Some Prices In The Retail Sector Drop When Demand Rises? Evidence From The Chilean Case," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 10(2), pages 151-168. [Downloadable!]
  8. Li, Lan & Carman, Hoy F. & Sexton, Richard J., 2005. "Grocery Retailer Pricing Behavior for California Avocados with Implications for Industry Promotion Strategies," 2005 Annual meeting, July 24-27, Providence, RI 19498, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  9. Genesove, David & Simhon, Avi, 2008. "Seasonality and the Effect of Advertising on Price," CEPR Discussion Papers 6999, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  10. Judith A. Chevalier & Anil K Kashyap & Peter E. Rossi, 2003. "Why Don't Prices Rise During Periods of Peak Demand? Evidence from Scanner Data," American Economic Review, American Economic Association, vol. 93(1), pages 15-37, March. [Downloadable!]
    Other versions:
  11. Tom S. Lee & I.P.L. Png, 2004. "Loss Leaders: An Indirect Empirical Test," Industrial Organization 0401008, EconWPA. [Downloadable!]
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