Identifying and characterising price leadership in British supermarkets
Abstract
Price leadership is a concept that lacks precision. We propose a deliberately narrow, falsifiable, definition and illustrate its feasibility using the two leading British supermarket chains. We find both firms engaging in leadership behaviour over a range of products, with the larger being somewhat more dominant but the smaller increasing leadership activity over time. Surprisingly, more price leadership events are price reductions than price increases, but the increases are of larger monetary amounts (so average price increases over time) and the events appear not necessarily related to cost changes. Price leadership appears to play some role in price increases.Download Info
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Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 987.Length:
Date of creation: 2012
Date of revision:
Handle: RePEc:wrk:warwec:987
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Keywords:This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-08 (All new papers)
- NEP-COM-2012-05-08 (Industrial Competition)
- NEP-HME-2012-05-08 (Heterodox Microeconomics)
References
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- AMIR, Rabah & STEPANOVA, Anna, 2004.
"Second-mover advantage and price leadership in Bertrand duopoly,"
CORE Discussion Papers
2004037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Amir, Rabah & Stepanova, Anna, 2006. "Second-mover advantage and price leadership in Bertrand duopoly," Games and Economic Behavior, Elsevier, vol. 55(1), pages 1-20, April.
- Rabah Amir & Anna Stepanova, 2000. "Second-Mover Advantage and Price Leadership in Bertrand Duopoly," CIE Discussion Papers 2000-10, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- Pastine, Ivan & Pastine, Tuvana, 2004. "Cost of delay and endogenous price leadership," International Journal of Industrial Organization, Elsevier, vol. 22(1), pages 135-145, January.
- Deneckere, Raymond J & Kovenock, Dan, 1992.
"Price Leadership,"
Review of Economic Studies,
Wiley Blackwell, vol. 59(1), pages 143-62, January.
- Raymond Deneckere & Dan Kovenock, 1988. "Price Leadership," Discussion Papers 773, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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