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Supermarket fluid milk pricing practices in the western United States

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Author Info

  • Hoy F. Carman

    (Department of Agricultural and Resource Economics, University of California, One Shields Avenue, Davis, California 95616)

  • Richard J. Sexton

    (Department of Agricultural and Resource Economics, University of California, One Shields Avenue, Davis, California 95616)

Abstract

This study analyzes retail milk pricing by supermarkets and marketing margin behavior for four fluid milk products in nine large metropolitan markets in the Western United States. Multiple empirical approaches are utilized to investigate retailer pricing behavior, and, on balance, these methods provide significant evidence of noncompetitive price behavior in each of the markets. Correlations of retail price changes indicate considerable pricing independence among retailers across cities, while rankings of retail prices by milk product provide significant evidence that prices are not based primarily on costs, as would be true if pricing were competitive. Estimated retail price responses to farm price changes are consistent with monopoly pricing behavior for several of the milk products in several of the markets. [EconLit Citations: L660, L810]. © 2005 Wiley Periodicals, Inc. Agribusiness 21: 509-530, 2005.

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File URL: http://hdl.handle.net/10.1002/agr.20062
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Agribusiness.

Volume (Year): 21 (2005)
Issue (Month): 4 ()
Pages: 509-530

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Handle: RePEc:wly:agribz:v:21:y:2005:i:4:p:509-530

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Web page: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297

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References

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  1. Azzeddine M. Azzam, 1999. "Asymmetry and Rigidity in Farm-Retail Price Transmission," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 525-533.
  2. Carman, Hoy F., 1998. "California Milk Marketing Margins," Journal of Food Distribution Research, Food Distribution Research Society, vol. 29(3), November.
  3. L Bettendorf & F Verboven, 2000. "Incomplete transmission of coffee bean prices: evidence from The Netherlands," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 27(1), pages 1-16, March.
  4. Cotterill, Ronald W. & Dhar, Tirtha Pratim, 2003. "Oligopoly Pricing with Differentiated Products: The Boston Fluid Milk Market Channel," Research Reports 25189, University of Connecticut, Food Marketing Policy Center.
  5. Frigon, Mathieu & Doyon, Maurice & Romain, Robert F.J., 1999. "Asymmetry in Farm-Retail Price Transmission in the Northeastern Fluid Milk Market," Research Reports 25220, University of Connecticut, Food Marketing Policy Center.
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Cited by:
  1. Charlebois, Sylvain & Langenbacher, Wolfgang & Tamilia, Robert D., 2007. "The Canadian Dairy Commission: an empirical survey on its relevance in today's civil society," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 10(01).
  2. Rabinowitz, Adam N. & Liu, Yizao, 2014. "The Impact of Regulatory Change on Retail Pricing: The New York State Milk Price Gouging Law," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(1), April.
  3. Xia, Tian & Li, Xianghong, 2009. "Asymmetric Price Transmission and Demand Characteristics," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49400, Agricultural and Applied Economics Association.
  4. Ahn, Byeong-Il & Lee, Hyunok, 2013. "Asymmetric transmission between factory and wholesale prices in fiberboard market in Korea," Journal of Forest Economics, Elsevier, vol. 19(1), pages 1-14.
  5. Fertő, Imre & Bakucs, Lajos Zoltán, 2009. "Árleszállítások és a kiskereskedelmi árak változása a tejtermékek piacán
    [Sales and retail price patterns on the market for milk products]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 634-647.
  6. Abbassi, Abdessalem & Tamini, Lota D. & Gervais, Jean-Philippe, 2011. "Do inventories have an impact on price transmission? Evidence from the Canadian chicken industry," MPRA Paper 30868, University Library of Munich, Germany.
  7. Ferto, Imre & Bakucs, Lajos Zoltan, 2009. "The patterns of retail price variation. The case of milk products," 2009 Conference, August 16-22, 2009, Beijing, China 51670, International Association of Agricultural Economists.

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