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Supermarket Competition through Price Promotions: A Cross Category Analysis

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  • Volpe, Richard J., III

Abstract

This study takes an important first step at quantifying the nature of competition between major supermarket chains through price promotions. Using data that covers virtually the entire product menus of supermarkets representing two major chains in 18 cities, I examine both the effect of direct competition on promotional intensity and the nature of promotional competition itself. In a counterintuitive finding, there appears to slightly less promotional activity in cities in which both chains compete directly, as compared to cities in which only one chain operates. Moreover, most promotional activity tends to be retaliatory, rather than accommodating, in nature. This study takes an important first step at quantifying the nature of competition between major supermarket chains through price promotions. Using data that covers virtually the entire product menus of supermarkets representing two major chains in 18 cities, I examine both the effect of direct competition on promotional intensity and the nature of promotional competition itself. In a counterintuitive finding, there appears to slightly less promotional activity in cities in which both chains compete directly, as compared to cities in which only one chain operates. Moreover, most promotional activity tends to be retaliatory, rather than accommodating, in nature.

Suggested Citation

  • Volpe, Richard J., III, 2009. "Supermarket Competition through Price Promotions: A Cross Category Analysis," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49582, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea09:49582
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    Keywords

    Agribusiness; Demand and Price Analysis;

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