IDEAS home Printed from https://ideas.repec.org/a/wly/agribz/v21y2005i4p509-530.html
   My bibliography  Save this article

Supermarket fluid milk pricing practices in the western United States

Author

Listed:
  • 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.

Suggested Citation

  • Hoy F. Carman & Richard J. Sexton, 2005. "Supermarket fluid milk pricing practices in the western United States," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 509-530.
    • Handle: RePEc:wly:agribz:v:21:y:2005:i:4:p:509-530
    DOI: 10.1002/agr.20062
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/agr.20062
    File Function: Link to full text; subscription required
    Download Restriction: no
    File URL: https://libkey.io/10.1002/agr.20062?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Sexton, Richard & Zhang, Mingxia & Chalfant, James, 2003. "Grocery Retailer Behavior in the Procurement and Sale of Perishable Fresh Produce," Contractor and Cooperator Reports 291974, United States Department of Agriculture, Economic Research Service.
    2. Carman, Hoy F., 1998. "California Milk Marketing Margins," Journal of Food Distribution Research, Food Distribution Research Society, vol. 29(3), pages 1-6, November.
    3. Ronald W. Cotterill & Tirtha Pratim Dhar, 2003. "Oligopoly Pricing with Differentiated Products: The Boston Fluid Milk Market Channel," Food Marketing Policy Center Research Reports 074, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    4. Mathieu Frigon & Maurice Doyon & Robert F.J. Romain, 1999. "Asymmetry in Farm-Retail Price Transmission in the Northeastern Fluid Milk Market," Food Marketing Policy Center Research Reports 045, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    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.
    6. 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.
    7. Bettendorf, L & Verboven, F, 2000. "Incomplete Transmission of Coffee Bean Prices: Evidence from the Netherlands," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 27(1), pages 1-16, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Li, Lan & Carman, Hoy F. & Sexton, Richard J., 2005. "Grocery Retailer Pricing Behavior for California Avocados with Implications for Industry Promotion Strategies," 2005 Annual meeting, July 24-27, Providence, RI 19498, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Rebecca Cleary & Jean-Paul Chavas, 2022. "Strategic supermarket pricing of private labels and manufacturer brands," Empirical Economics, Springer, vol. 62(6), pages 2921-2950, June.
    3. 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, Cambridge University Press, vol. 43(1), pages 178-192, April.
    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. Bolotova, Yuliya V. & Novakovic, Andrew M., 2015. "An Empirical Analysis of Wholesale Cheese Pricing Practices on the Chicago Mercantile Exchange (CME) Spot Cheese Market," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 18(3), pages 1-18, September.
    6. Abdessalem Abbassi & Lota D. Tamini & Jean‐Philippe Gervais, 2012. "Do Inventories Have an Impact on Price Transmission? Evidence From the Canadian Chicken Industry," Agribusiness, John Wiley & Sons, Ltd., vol. 28(2), pages 173-186, March.
    7. Benaissa Chidmi & Rigoberto A. Lopez & Ronald W. Cotterill, 2005. "Retail oligopoly power, dairy compact, and Boston milk prices," Agribusiness, John Wiley & Sons, Ltd., vol. 21(4), pages 477-491.
    8. Davis, Christopher G. & Dong, Diansheng & Blayney, Donald P. & Yen, Steven T. & Stillman, Richard, 2012. "U.S. Fluid Milk Demand: A Disaggregated Approach," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 15(1), pages 1-26, February.
    9. Zeng, Shuwei & Gould, Brian, 2016. "Is There Asymmetric Price Transmission in the U.S. Fluid Milk Market?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 237346, Agricultural and Applied Economics Association.
    10. Yizao Liu & Xuan Chen & Adam N. Rabinowitz, 2019. "The role of retail market power and state regulations in the heterogeneity of farm‐retail price transmission of private label and branded products," Agricultural Economics, International Association of Agricultural Economists, vol. 50(1), pages 91-99, January.
    11. Zoltán BAKUCS & Imre FERTŐ, 2015. "Empirical tests of sale theories: Hungarian milk prices," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 61(11), pages 511-521.
    12. 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, vol. 10(1), pages 1-19.
    13. Bolotova Yuliya V., 2024. "Private Supply Management and Market Power in the U.S. Dairy Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 22(1), pages 1-17.
    14. Carman, Hoy F. & Li, Lan & Sexton, Richard J., 2009. "An Economic Evaluation of the Hass Avocado Promotion Order’s First Five Years," Research Reports 121697, University of California, Davis, Giannini Foundation.
    15. Bolotova, Yulia V., 2023. "Market Power in the U.S. Dairy Industry," Applied Economics Teaching Resources (AETR), Agricultural and Applied Economics Association, vol. 5(2), March.
    16. Bolotova, Yuliya V., 2017. "An Analysis of Retail Fluid Milk Pricing in the Eastern United States," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252744, Southern Agricultural Economics Association.
    17. Ricardo Medeiros de Castro, 2021. "Documento de Trabalho 01/2021- The problematic binary approach to the concept of dominance," Documentos de Trabalho 2021010, Conselho Administrativo de Defesa Econômica (Cade), Departamento de Estudos Econômicos.
    18. Jung Hun HAN & Byeong-Il AHN, 2015. "Multiple-regime price transmission between wheat and wheat flour prices in Korea," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 61(12), pages 552-563.
    19. 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.
    20. Bolotova, Yuliya V. & Novakovic, Andrew M., 2016. "An Analysis of Retail Milk Pricing in the Eastern United States," Journal of Food Distribution Research, Food Distribution Research Society, vol. 47(1), pages 1-8, March.
    21. 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.
    22. Farajzadeh, Z. & Amiraslany, A., 2018. "Examination of the international market power for Iranian pistachios," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277345, International Association of Agricultural Economists.
    23. Ricardo Medeiros de Castro, 2021. "Documento de Trabalho 001/2021- The problematic binary approach to the concept of dominance," Documentos de Trabalho 12021, Conselho Administrativo de Defesa Econômica (Cade), Departamento de Estudos Econômicos.
    24. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Lan & Sexton, Richard J. & Xia, Tian, 2006. "Food Retailers' Pricing and Marketing Strategies, with Implications for Producers," Agricultural and Resource Economics Review, Cambridge University Press, vol. 35(2), pages 221-238, October.
    2. Li, Chenguang & Sexton, Richard J., 2009. "Impacts of Retailers’ Pricing Strategies for Produce Commodities on Farmer Welfare," 2009 Conference, August 16-22, 2009, Beijing, China 51720, International Association of Agricultural Economists.
    3. Xia, Tian & Sexton, Richard J., 2009. "Retail Prices for Milk by Fat Content: A New Theory and Empirical Test of Retailer Pricing Behavior," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(2), pages 1-20, August.
    4. 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.
    5. Maurizio Aragrande & Mauro Bruni & Alberico Loi & Roberto Esposti, 2017. "The effect of EU 2006 sugar regime reform on vertical price transmission," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-20, December.
    6. Hakan Yilmazkuday, 2018. "Spatial dispersion of retail margins: evidence from Turkish agricultural prices," Agricultural Economics, International Association of Agricultural Economists, vol. 49(4), pages 455-462, July.
    7. Mohammad J Alam & Raghbendra Jha, 2016. "Asymmetric threshold vertical price transmission in wheat and flour markets in Dhaka (Bangladesh): seemingly unrelated regression analysis," ASARC Working Papers 2016-03, The Australian National University, Australia South Asia Research Centre.
    8. Karantininis, Kostas & Katrakylidis, Kostas & Persson, Morten, 2011. "Price Transmission in the Swedish Pork Chain: Asymmetric non linear ARDL," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114772, European Association of Agricultural Economists.
    9. Ben Kaabia, Monia & Gil, Jose Maria, 2005. "Asymetric Price Transmission in the Spanish Lamb Sector," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24631, European Association of Agricultural Economists.
    10. Li, Chenguang & Sexton, Richard J., 2013. "Grocery-Retailer Pricing Behavior with Implications for Farmer Welfare," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), pages 1-18, August.
    11. Li, Lan & Carman, Hoy F. & Sexton, Richard J., 2005. "Grocery Retailer Pricing Behavior for California Avocados with Implications for Industry Promotion Strategies," 2005 Annual meeting, July 24-27, Providence, RI 19498, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Oral Capps & Pablo Sherwell, 2007. "Alternative approaches in detecting asymmetry in farm-retail price transmission of fluid milk," Agribusiness, John Wiley & Sons, Ltd., vol. 23(3), pages 313-331.
    13. Ronald W. Cotterill, 2006. "Antitrust analysis of supermarkets: global concerns playing out in local markets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(1), pages 17-32, March.
    14. Tian Xia & Brian Sancewich, 2018. "Interaction between buyer power in agricultural procurement and seller power in food retailing, and optimal allocation of anti-trust efforts," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-19, December.
    15. Rajcaniova, Miroslava & Pokrivcak, Jan, 2013. "Asymmetry in Price Transmission Mechanism: The Case of Slovak Potato Market," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 16(2), pages 1-8, September.
    16. Antonioli, Federico & Santeramo, Fabio, 2017. "Vertical Price Transmission in Milk Supply Chain: Market Changes and Asymmetric Dynamics," 2017 Sixth AIEAA Conference, June 15-16, Piacenza, Italy 261256, Italian Association of Agricultural and Applied Economics (AIEAA).
    17. Lass, Daniel A., 2005. "Asymmetric Response of Retail Milk Prices in the Northeast Revisited," Research Reports 149026, University of Connecticut, Food Marketing Policy Center.
    18. Zhou, Mo & Buongiorno, Joseph, 2005. "Price transmission between products at different stages of manufacturing in forest industries," Journal of Forest Economics, Elsevier, vol. 11(1), pages 5-19, June.
    19. Celine Bonnet & Pierre Dubois & Sofia B. Villas Boas & Daniel Klapper, 2013. "Empirical Evidence on the Role of Nonlinear Wholesale Pricing and Vertical Restraints on Cost Pass-Through," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 500-515, May.
    20. Michel Simioni & Frédéric Gonzales & Patrice Guillotreau & Laurent Le Grel, 2013. "Detecting Asymmetric Price Transmission with Consistent Threshold along the Fish Supply Chain," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 61(1), pages 37-60, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:agribz:v:21:y:2005:i:4:p:509-530. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.