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Cost Pass-Through In Differentiated Product Markets: A Disaggregated Study For Milk And Butter

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  • Loy, Jens-Peter
  • Holm, Thore
  • Steinhagen, Carsten
  • Glauben, Thomas

Abstract

In food retailing a high degree of static price dispersion between and within stores and between brands has been documented, but at the brand and/or retail outlet level the dynamic behaviour of prices, as well as its causes, have not been analysed in the European food market context. In this paper we estimate the dynamic pricing behaviour of brands at various retail outlets to identify the role of private (low-price brands) and national (high-price brands) labels to explain the dispersion of retail price dynamics. The results indicate significant asymmetries in cost pass-through processes, which vary between brands and outlets. In particular, private labels (low-price brands) adjust prices faster than national labels (high-price brands). Moreover, cost pass-through is slightly more (positive) asymmetrical for private labels than for high-price national brands.

Suggested Citation

  • Loy, Jens-Peter & Holm, Thore & Steinhagen, Carsten & Glauben, Thomas, 2014. "Cost Pass-Through In Differentiated Product Markets: A Disaggregated Study For Milk And Butter," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 169762, Agricultural Economics Society.
  • Handle: RePEc:ags:aesc14:169762
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    Cited by:

    1. Loy, Jens-Peter & Weiss, Christoph R. & Glauben, Thomas, 2016. "Asymmetric cost pass-through? Empirical evidence on the role of market power, search and menu costs," Journal of Economic Behavior & Organization, Elsevier, vol. 123(C), pages 184-192.
    2. Bittmann, Thomas & Holzer, Patrick & Loy, Jens-Peter, 2016. "Seasonal Cost Pass-Through In The German Milk Market," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244779, German Association of Agricultural Economists (GEWISOLA).
    3. Tifaoui, Said & Cramon-Taubadel, Stephan von, 2015. "Temporary sales prices and findings of asymmetric vertical price transmission in scanner data," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 204295, Agricultural Economics Society.

    More about this item

    Keywords

    Cost Pass-Through; Panel Threshold Error Correction Model; Dairy; Retail Market; Germany; Demand and Price Analysis; International Relations/Trade; Livestock Production/Industries; Marketing; C32; D21; L11; L81;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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