Retail Price Stickiness, Market Structure and Distribution Channels
AbstractUsing Japanese scanner data of transaction prices and sales for more than 1,600 commodity groups from 1988 to 2008, we find a statistically significant negative correlation between the frequency of price changes and the degree of market concentration. We also find that structural factors of a distribution channel are significantly correlated with rigidity in retail prices. Decomposing the frequency of price changes into the frequency of intraday, sale, and regular price changes, we find that both inter- and intra-brand competition positively affect the frequency of sales. Inter-brand competition among manufacturers has a significant and positive effect on the frequency of regular price changes, whereas intra-brand competition among retailers has no such significant effect. We also document that the term of contracts between manufacturers and retailers has a significant and positive effect on price stickiness.
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Bibliographic InfoPaper provided by Research Center for Price Dynamics, Institute of Economic Research, Hitotsubashi University in its series Research Center for Price Dynamics Working Paper Series with number 4.
Length: 20 p.
Date of creation: Mar 2012
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Market structure; Distribution channels; Sticky prices;
Find related papers by JEL classification:
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-02 (All new papers)
- NEP-COM-2012-05-02 (Industrial Competition)
- NEP-HME-2012-05-02 (Heterodox Microeconomics)
- NEP-IND-2012-05-02 (Industrial Organization)
- NEP-MKT-2012-05-02 (Marketing)
- NEP-MST-2012-05-02 (Market Microstructure)
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