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A single espresso, please! Rationalizing espresso price dispersion across Italian cities

Author

Listed:
  • F. Delbono
  • G. Dipoppa
  • L. Lambertini
  • C. Reggiani

Abstract

This paper aims at providing an explanation of the observed espresso price dispersion across major Italian cities. The empirical evidence suggests a positive relationships between the average espresso price in a city and the number of coffee shops (normalized for the adult population) operating in that city. This finding is shown to be robust after controlling for GDP per capita and consumers.price index. We provide an interpretation of the empirical findings relying on a model of price competition delivering a continuum of Nash equilibria, where firms adjust the mark-up to offset the negative effect of any increase in their number.

Suggested Citation

  • F. Delbono & G. Dipoppa & L. Lambertini & C. Reggiani, 2015. "A single espresso, please! Rationalizing espresso price dispersion across Italian cities," Working Papers wp1017, Dipartimento Scienze Economiche, Universita' di Bologna.
  • Handle: RePEc:bol:bodewp:wp1017
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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