Price Variability Or Rigidity In The Food-Retailing Sector? Theoretical Analysis And Evidence From German Scanner Data
AbstractIn many industrialized countries, the grocery-retailing sector exhibits a strong and increasing market concentration. Hence, it is important to understand retail pricing for many questions related to market power in the marketing chain and to agricultural and food policies. We analyze intertemporal pricing of grocery retailers in Germany with a large set of scanner data for processed foods. In theory, food prices could be rather variable, e.g. due to fluctuating commodity prices in a competitive world, or rather rigid, e.g. due to price adjustment costs. We elaborate that retail sales are crucial and raise food price variability at the points of sale. Despite this, prices are rather rigid and often do not change for many weeks. Moreover, pricing strategies for identical brands vary strongly across retailers. Retailers seem to have differential pricing strategies and, thus, market power. This casts substantial doubt on the assumption of a competitive price transmission in the marketing channel underlying most analyses in agricultural economics.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Association of Agricultural Economists in its series 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa with number 25867.
Date of creation: 2003
Date of revision:
Grocery retailing sector; pricing patterns; sales; price rigidity; scanner data.; Demand and Price Analysis; Marketing;
Other versions of this item:
- Herrmann, Roland & Möser, Anke, 2003. "Price variability or rigidity in the food-retailing sector? Theoretical analysis and evidence from German scanner data," Discussion Papers 11, Justus Liebig University Giessen, Center for international Development and Environmental Research (ZEU).
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Steve McCorriston, 2002. "Why should imperfect competition matter to agricultural economists?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(3), pages 349-371, July.
- Daniel Levy & Mark Bergen & Shantanu Dutta & Robert Venable, 2005.
"The Magnitude of Menu Costs: Direct Evidence from Large U.S. Supermarket Chains,"
- Levy, Daniel, et al, 1997. "The Magnitude of Menu Costs: Direct Evidence from Large U.S. Supermarket Chains," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 791-825, August.
- Little, John D C & Shapiro, Jeremy F, 1980. "A Theory for Pricing Nonfeatured Products in Supermarkets," The Journal of Business, University of Chicago Press, vol. 53(3), pages S199-209, July.
- Saul Lach & Daniel Tsiddon, 1994.
"Staggering and Synchronization in Price-Setting: Evidence from Multipro-duct Firms,"
NBER Working Papers
4759, National Bureau of Economic Research, Inc.
- Lach, Saul & Tsiddon, Daniel, 1996. "Staggering and Synchronization in Price-Setting: Evidence from Multiproduct Firms," American Economic Review, American Economic Association, vol. 86(5), pages 1175-96, December.
- Paolo Buccirossi & StÈphan Marette & Alessandra Schiavina, 2002. "Competition policy and the agribusiness sector in the European Union," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(3), pages 373-397, July.
- Elizabeth Powers & Nicholas Powers, 2001. "The Size and Frequency of Price Changes: Evidence from Grocery Stores," Review of Industrial Organization, Springer, vol. 18(4), pages 397-416, June.
- Cuddy, John D A & Della Valle, P A, 1978. "Measuring the Instability of Time Series Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 40(1), pages 79-85, February.
- Dennis W. Carlton, 1987.
"The Rigidity of Prices,"
NBER Working Papers
1813, National Bureau of Economic Research, Inc.
- Sheshinski, Eytan & Weiss, Yoram, 1977. "Inflation and Costs of Price Adjustment," Review of Economic Studies, Wiley Blackwell, vol. 44(2), pages 287-303, June.
- Slade, Margaret E, 1998. "Optimal Pricing with Costly Adjustment: Evidence from Retail-Grocery Prices," Review of Economic Studies, Wiley Blackwell, vol. 65(1), pages 87-107, January.
- Weber, Sascha A. & Anders, Sven, 2007.
"Price Rigidity and Market Power in German Retailing,"
31, Justus Liebig University Giessen, Center for international Development and Environmental Research (ZEU).
- Sascha A. Weber & Sven M. Anders, 2007. "Price rigidity and market power in German retailing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 737-749.
- Weber, Sascha A. & Anders, Sven, 2005. "Price Rigidity and Market Power in German Retailing," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24721, European Association of Agricultural Economists.
- Herrmann, Roland & Moeser, Anke, 2005. "Psychological Prices and Price Rigidity in Grocery Retailing: Analysis of German Scanner Data," 2005 Annual meeting, July 24-27, Providence, RI 19471, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Roland Herrmann & Anke Moeser, 2006. "Do psychological prices contribute to price rigidity? Evidence from German scanner data on food brands," Agribusiness, John Wiley & Sons, Ltd., vol. 22(1), pages 51-67.
- Herrmann Roland & Moeser Anke & Weber Sascha Alexander, 2005. "Price Rigidity in the German Grocery-Retailing Sector: Scanner-Data Evidence on Magnitude and Causes," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(1), pages 1-37, February.
- Egbert, Henrik & Fischer, Gundula & Bredl, Sebastian, 2009. "Advertisements or friends? Formal and informal recruitment methods in Tanzania," Discussion Papers 46, Justus Liebig University Giessen, Center for international Development and Environmental Research (ZEU).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.