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Price Transmission at the Micro Level: What Accounts for the Heterogeneity?

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  • Lloyd, T.
  • McCorriston, S.
  • Lan, H.
  • Morgan, W.

Abstract

We use high-frequency scanner data to estimate product-specific price transmission elasticities across product types, between national brands and private labels and across retail chains in the UK. The results provide new insights into the determinants of price transmission including the role of vertical control in the retail chain, the elasticity of retail mark-ups and retailer market power. Using data on 106 orange juice products over 130 weeks for 7 UK retail chains, we highlight significant variation in price transmission by chain and that the characteristics of pricing behaviour and differences in vertical control across are important determinants of price transmission. Acknowledgement :

Suggested Citation

  • Lloyd, T. & McCorriston, S. & Lan, H. & Morgan, W., 2018. "Price Transmission at the Micro Level: What Accounts for the Heterogeneity?," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277063, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae18:277063
    DOI: 10.22004/ag.econ.277063
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    1. Daniel Hosken & David Reiffen, 2004. "Patterns of Retail Price Variation," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 128-146, Spring.
    2. Emi Nakamura & Dawit Zerom, 2010. "Accounting for Incomplete Pass-Through," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(3), pages 1192-1230.
    3. Gita Gopinath & Oleg Itskhoki, 2010. "Frequency of Price Adjustment and Pass-Through," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(2), pages 675-727.
    4. Céline Bonnet & Pierre Dubois, 2010. "Inference on vertical contracts between manufacturers and retailers allowing for nonlinear pricing and resale price maintenance," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 139-164, March.
    5. Nakamura, Alice O. & Nakamura, Emi & Nakamura, Leonard I., 2011. "Price dynamics, retail chains and inflation measurement," Journal of Econometrics, Elsevier, vol. 161(1), pages 47-55, March.
    6. E. Glen Weyl & Michal Fabinger, 2013. "Pass-Through as an Economic Tool: Principles of Incidence under Imperfect Competition," Journal of Political Economy, University of Chicago Press, vol. 121(3), pages 528-583.
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    Demand and Price Analysis;

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