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Retailers' response to wholesale price changes: new evidence from scanner-based quantity-weighted beef prices

Author

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  • Christian Rojas

    (Department of Resource Economics, University of Massachusetts-Amherst, Amherst, MA 01003)

  • Alexandra Andino

    (Department of Agricultural and Applied Economics, Virginia Tech, Blacksburg, VA 24061)

  • Wayne D. Purcell

    (Department of Agricultural and Applied Economics, Virginia Tech, Blacksburg, VA 24061)

Abstract

Retailers are often criticized for a slow response in retail prices to changes in wholesale beef prices. The unresponsiveness, especially when wholesale and farm prices are declining, is seen as a lack of competitiveness and as a reason for congressional action to regulate behavior of processors or retailers. The validity of the historical analyses of retailer price responsiveness is questionable, however. Traditional Bureau of Labor Statistics (BLS) retail beef prices biased upward and do not account for large volumes sold at discounted prices. This article uses newly available scanner-based quantity-weighted retail prices to suggest that retailers' response to changes in wholesale beef prices is significantly larger and possibly quicker than is shown by traditional BLS measures of retail prices. Recent efforts to prompt legislation to regulate how firms behave along the beef supply chain, which are based only on arguments that retailers are not responding to price changes at the wholesale level, may be inappropriate. [L110, L660, D400] © 2008 Wiley Periodicals, Inc.

Suggested Citation

  • Christian Rojas & Alexandra Andino & Wayne D. Purcell, 2008. "Retailers' response to wholesale price changes: new evidence from scanner-based quantity-weighted beef prices," Agribusiness, John Wiley & Sons, Ltd., vol. 24(1), pages 1-15.
    • Handle: RePEc:wly:agribz:v:24:y:2008:i:1:p:1-15
    DOI: 10.1002/agr.20143
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    Cited by:

    1. Schroeder, Ted C & Tonsor, Glynn T & Schulz, Lee L & Johnson, Bradley J & Sommers, Christopher, 2021. "USDA ERS Meat Price Spread Data Product Review," Contractor and Cooperator Reports 327349, United States Department of Agriculture, Economic Research Service.
    2. Taylor, Mykel R. & Tonsor, Glynn T., 2013. "Revealed Demand for Country-of-Origin Labeling of Meat in the United States," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(2), pages 1-13, August.
    3. Peter Berck & Ephraim Leibtag & Alex Solis & Sofia Villas-Boas, 2009. "Patterns of Pass-through of Commodity Price Shocks to Retail Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1456-1461.
    4. Erdal Erol & Sayed H. Saghaian, 2022. "The COVID-19 Pandemic and Dynamics of Price Adjustment in the U.S. Beef Sector," Sustainability, MDPI, vol. 14(8), pages 1-14, April.
    5. Solomon Odiase & Sayed H. Saghaian, 2022. "Impact of COVID-19 Pandemic on Vertical Price Transmission in the U.S. Fresh Banana Market," Sustainability, MDPI, vol. 14(10), pages 1-16, May.

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