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Multiproduct Firms' Pricing Behavior in the Italian Grocery Trade

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  • Giulietti, M.

Abstract

This paper investigates the determinants of price dispersion between staple and non-staple goods in grocery retailing, as the result of pricing decisions of multiproduct firms. Contradictory theoretical predictions about the nature of supermarkets' pricing behaviour are compared by highlighting the main underlying behavioural assumptions. These theoretical predictions are tested empirically using disaggregated data from the Italian grocery trade. The emprirical results provide evidence for the existence, in all types of retail organisation, of the form of price discrimination suggested in Bliss (1984). The results are consistent with discrimination due to the exploitation of consumers' switching costs.

Suggested Citation

  • Giulietti, M., 1995. "Multiproduct Firms' Pricing Behavior in the Italian Grocery Trade," Discussion Papers 9509, University of Exeter, Department of Economics.
    • Handle: RePEc:exe:wpaper:9509
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    Cited by:

    1. Li, Lan & Carman, Hoy F. & Sexton, Richard J., 2005. "Grocery Retailer Pricing Behavior for California Avocados with Implications for Industry Promotion Strategies," 2005 Annual meeting, July 24-27, Providence, RI 19498, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Barron, John M. & Taylor, Beck A. & Umbeck, John R., 2004. "Number of sellers, average prices, and price dispersion," International Journal of Industrial Organization, Elsevier, vol. 22(8-9), pages 1041-1066, November.
    3. Ian Sheldon & Richard Sperling, 2003. "Estimating the Extent of Imperfect Competition in the Food Industry: What Have We Learned?," Journal of Agricultural Economics, Wiley Blackwell, vol. 54(1), pages 89-109, March.
    4. Patrick Paul Walsh & Ciara Whelan, 1999. "A Rationale for Repealing the 1987 Groceries Order," The Economic and Social Review, Economic and Social Studies, vol. 30(1), pages 71-90.
    5. Timothy Richards, 2007. "A nested logit model of strategic promotion," Quantitative Marketing and Economics (QME), Springer, vol. 5(1), pages 63-91, March.
    6. Barron, John M. & Umbeck, John R. & Waddell, Glen R., 2008. "Consumer and competitor reactions: Evidence from a field experiment," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 517-531, March.
    7. Clerides, Sofronis K., 2002. "Book value: intertemporal pricing and quality discrimination in the US market for books," International Journal of Industrial Organization, Elsevier, vol. 20(10), pages 1385-1408, December.

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