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Explaining Price Dispersion for Homogeneous Grocery Products

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  • Aalto-Setälä Ville

    (National Consumer Research Centre, Helsinki, Finland)

Abstract

This study examines the dispersion in prices for homogeneous grocery products, and studies the effect of product characteristics, demographic characteristics of consumers, and market structure on search costs and price dispersion. The findings show that price dispersion is affected by search costs. The variables that increased relative price dispersion the most were low budget share and low price of the product. Demographic characteristics affected price dispersion as well: a high proportion of families with children and a low medium income in the market area decreased dispersion in prices. Market structure did not affect price dispersion in the study data.

Suggested Citation

  • Aalto-Setälä Ville, 2003. "Explaining Price Dispersion for Homogeneous Grocery Products," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 1(1), pages 1-16, February.
    • Handle: RePEc:bpj:bjafio:v:1:y:2003:i:1:n:9
    DOI: 10.2202/1542-0485.1024
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    References listed on IDEAS

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    Cited by:

    1. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, January.
    2. Adrienne Ohler & Vincent Smith, 2013. "Population Characteristics And Price Dispersion In The Market For Prescription Drugs," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 486-502, July.
    3. Adrienne M. Ohler, 2011. "Who Searches for Low Prices? Population Characteristics and Price Dispersion in the Market for Prescription Drugs," Working Paper Series 20110701, Illinois State University, Department of Economics.

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