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Tyre price dispersion across retail outlets in the UK

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  • Juan Delgado
  • Michael Waterson

Abstract

We investigate price dispersion in a retail market (car tyres) characterised by outlets each selling a range of products, some of which are manufactured by their owners. Consumers face substantial price dispersion across outlets even for very tightly defined products. We show that this price dispersion has systematic components relating to retailer‐manufacturer interactions. One specific result is that chains owned by manufacturers sell other manufacturers' tyres on average nearly 20% more expensively than do independent stores and over 11% more expensively than their own equivalent branded product.

Suggested Citation

  • 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.
    • Handle: RePEc:bla:jindec:v:51:y:2003:i:4:p:491-509
    DOI: 10.1111/j.0022-1821.2003.00212.x
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    References listed on IDEAS

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    1. Shepard, Andrea, 1991. "Price Discrimination and Retail Configuration," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 30-53, February.
    2. Png, I P L & Reitman, David, 1995. "Why Are Some Products Branded and Others Not?," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 207-224, April.
    3. Borenstein, Severin & Rose, Nancy L, 1994. "Competition and Price Dispersion in the U.S. Airline Industry," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 653-683, August.
    4. Alan T. Sorensen, 2000. "Equilibrium Price Dispersion in Retail Markets for Prescription Drugs," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 833-862, August.
    5. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
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    Cited by:

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    2. Mizgier, Kamil J. & Wagner, Stephan M. & Holyst, Janusz A., 2012. "Modeling defaults of companies in multi-stage supply chain networks," International Journal of Production Economics, Elsevier, vol. 135(1), pages 14-23.
    3. Jason Allen & Robert Clark & Jean-François Houde, 2014. "Price Dispersion in Mortgage Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 62(3), pages 377-416, September.
    4. MANEZ, Juan A. & MONER-COLONQUES, Rafael & SEMPERE-MONERRIS, José J. & URBANO, Amparo, 2011. "Price differentials among brands in retail distribution: product quality and service quality," LIDAM Discussion Papers CORE 2011017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    5. Michael Thompson & Steve Thompson, 2008. "Intra-industry differences in vertical integration, heterogeneous costs and pricing: the case of web hosting," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 35(5), pages 503-523, December.
    6. Ma, Chao, 2020. "Per-customer quantity limit and price discrimination: Evidence from the U.S. residential mortgage market," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    7. Juan A. Mañez & Rafael Moner Colonques & Jose J. Sempere-Monerris & Amparo Urbano, 2016. "Brand price differentials in retail distribution: product quality and service quality," Applied Economics, Taylor & Francis Journals, vol. 48(59), pages 5749-5760, December.
    8. Moraga-González, José Luis & Wildenbeest, Matthijs R., 2008. "Maximum likelihood estimation of search costs," European Economic Review, Elsevier, vol. 52(5), pages 820-848, July.
    9. Samir Mamadehussene, 2021. "Measuring the competition effects of price-matching guarantees," Quantitative Marketing and Economics (QME), Springer, vol. 19(3), pages 261-287, December.
    10. Simon Loertscher & Yves Schneider, 2011. "Chain Stores, Consumer Mobility, and Market Structure," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 167(2), pages 236-246, June.
    11. Xulia González & Daniel Miles-Touya, 2018. "Price dispersion, chain heterogeneity, and search in online grocery markets," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(1), pages 115-139, March.
    12. 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.

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