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The impact of cross-sectional data aggregation on the measurement of vertical price transmission: An experiment with German food prices

  • Stephan von Cramon-Taubadel

    (Department of Agricultural Economics, University of Göttingen, Platz der Göttinger Sieben 5, D-37073 Göttingen, Germany)

  • Jens-Peter Loy

    (Department of Agricultural Economics, University of Kiel, Olshausenstra�e 40, D-24118 Kiel, Germany)

  • Jochen Meyer

    (Department of Agricultural Economics, University of Göttingen, Platz der Göttinger Sieben 5, D-37073 Göttingen, Germany)

The impact of cross-sectional aggregation over individual retail stores on the estimation and testing of vertical price transmission between the wholesale and retail levels is investigated using a unique data set of individual retail prices in Germany. Systematic differences between the results of estimations using aggregated data on the one hand, and disaggregated data on the other, are discussed theoretically and confirmed empirically. The results suggest that estimation with aggregated data can generate misleading conclusions about price transmission behavior at the level of the individual units (i.e., retail stores) that underlie these aggregates. [JEL classifications: C22, L11, D40] © 2006 Wiley Periodicals, Inc. Agribusiness 22: 505-522, 2006.

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File URL: http://hdl.handle.net/10.1002/agr.20100
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Article provided by John Wiley & Sons, Ltd. in its journal Agribusiness.

Volume (Year): 22 (2006)
Issue (Month): 4 ()
Pages: 505-522

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Handle: RePEc:wly:agribz:v:22:y:2006:i:4:p:505-522
Contact details of provider: Web page: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297

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