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Chain‐Store Pricing Across Local Markets

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  • Paul W. Dobson
  • Michael Waterson

Abstract

Chain‐stores now dominate most areas of retailing. While retailers may operate nationally or even internationally, the markets they compete in are largely local. How should they best operate pricing policy in respect of the different markets served—price uniformly across the local markets or on a local basis according to market conditions? We model this by allowing local market differences, with retail markets differing by their size and the number of players present. We show that practising price discrimination is not always best for a chain‐store. Competitive conditions exist under which uniform pricing can raise profits.

Suggested Citation

  • Paul W. Dobson & Michael Waterson, 2005. "Chain‐Store Pricing Across Local Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(1), pages 93-119, March.
    • Handle: RePEc:bla:jemstr:v:14:y:2005:i:1:p:93-119
    DOI: 10.1111/j.1430-9134.2005.00035.x
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    References listed on IDEAS

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    1. Roger Clarke & Stephen Davies & Paul Dobson & Michael Waterson, 2002. "Buyer Power and Competition in European Food Retailing," Books, Edward Elgar Publishing, number 2405.
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    5. Juan Delgado & Michael Waterson, 2003. "Tyre price dispersion across retail outlets in the UK," Journal of Industrial Economics, Wiley Blackwell, vol. 51(4), pages 491-509, December.
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