IDEAS home Printed from https://ideas.repec.org/p/ags/asumwp/28542.html
   My bibliography  Save this paper

Sales Promotion and Cooperative Retail Pricing Strategies

Author

Listed:
  • Richards, Timothy J.
  • Patterson, Paul M.

Abstract

Supermarket retailers make strategic pricing decisions in a high-frequency, repeated game environment both in buying and selling fresh produce. In this context, there is some question as to whether a non-cooperative equilibrium can emerge that produces margins above the competitive level. Supermarket pricing results from tacitly collusive equilibria supported by trigger price strategies played in upstream markets. Upstream activities are, in turn, driven by periodic retail price promotions. We test this hypothesis using a sample of fresh produce pricing data from 20 supermarket chains in markets distributed throughout the U.S. Our results support the existence of tacitly collusive non-cooperative equilibria in upstream and downstream markets.

Suggested Citation

  • Richards, Timothy J. & Patterson, Paul M., 2004. "Sales Promotion and Cooperative Retail Pricing Strategies," Working Papers 28542, Arizona State University, Morrison School of Agribusiness and Resource Management.
  • Handle: RePEc:ags:asumwp:28542
    DOI: 10.22004/ag.econ.28542
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/28542/files/wp040006.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.28542?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057, Elsevier.
    2. Dimitri, Carolyn & Tegene, Abebayehu & Kaufman, Phillip R., 2003. "U.S. Fresh Produce Markets: Marketing Channels, Trade Practices, And Retail Pricing Behavior," Agricultural Economic Reports 33907, United States Department of Agriculture, Economic Research Service.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hamister, James W. & Suresh, Nallan C., 2008. "The impact of pricing policy on sales variability in a supermarket retail context," International Journal of Production Economics, Elsevier, vol. 111(2), pages 441-455, February.
    2. Franz Wirl, 2015. "Downstream and upstream oligopolies when retailer’s effort matters," Journal of Economics, Springer, vol. 116(2), pages 99-127, October.
    3. Richards, Timothy J. & Acharya, Ram N. & Molina, Ignacio, 2009. "Retail and Wholesale Market Power in Organic Foods," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49329, Agricultural and Applied Economics Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lahcen ACHY & Azzeddine AZZAM & Khalid SEKKAT, 2009. "Coping With Data Limitations When Measuring Oligopoly Power In A Developing Country," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 9(2).
    2. Craig Gallet, 2001. "The Gradual Response of Market Power to Mergers in the U.S. Steel Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 18(3), pages 327-336, May.
    3. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 2, chapter 15, pages 1073-1225, Elsevier.
    4. Deodhar, Satish Y. & Sheldon, Ian M., 1996. "Estimation Of Imperfect Competition In Food Marketing: A Dynamic Analysis Of The German Banana Market," Journal of Food Distribution Research, Food Distribution Research Society, vol. 27(3), pages 1-10, October.
    5. Herbert Dawid & Michael Neugart, 2023. "Effects of technological change and automation on industry structure and (wage-)inequality: insights from a dynamic task-based model," Journal of Evolutionary Economics, Springer, vol. 33(1), pages 35-63, January.
    6. Ellalee, Haider & Alali, Walid Y., 2022. "A Welfare and Pass-Through Effects of Regulations within Imperfect Competition," MPRA Paper 116512, University Library of Munich, Germany.
    7. Nicola Cetorelli & Michele Gambera, 2001. "Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data," Journal of Finance, American Finance Association, vol. 56(2), pages 617-648, April.
    8. Ho, Chun-Yu, 2012. "Market structure, welfare, and banking reform in China," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 291-313.
    9. Kutlu, Levent & Sickles, Robin & Tsionas, Mike G., 2019. "Heterogeneous Decision-Making and Market Power," Working Papers 19-008, Rice University, Department of Economics.
    10. Brissimis, Sophocles N. & Delis, Manthos D., 2011. "Bank-level estimates of market power," European Journal of Operational Research, Elsevier, vol. 212(3), pages 508-517, August.
    11. Putsis, William Jr. & Dhar, Ravi, 2001. "An empirical analysis of the determinants of category expenditure," Journal of Business Research, Elsevier, vol. 52(3), pages 277-291, June.
    12. Lukáš Čechura & Tinoush Jamali Jaghdani, 2021. "Market Imperfections within the European Wheat Value Chain: The Case of France and the United Kingdom," Agriculture, MDPI, vol. 11(9), pages 1-21, August.
    13. Kuhn, Dieter, 2011. "Delayering and Firm Performance: Evidence from Swiss firm-level Data," Working papers 2011/02, Faculty of Business and Economics - University of Basel.
    14. Sigal Ribon & Oved Yosha, 1999. "Financial Liberalization and Competition in Banking: An Empirical Investigation," Bank of Israel Working Papers 1999.05, Bank of Israel.
    15. Nicholas ECONOMIDES, 2011. "Broadband Openness Rules Are Fully Justified by Economic Research," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(84), pages 127-151, 4th quart.
    16. Steven T Berry & Giovanni Compiani, 2023. "An Instrumental Variable Approach to Dynamic Models," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(4), pages 1724-1758.
    17. Rabah Amir, "undated". "Market Structure, Scale Economies and Industry Performance," CIE Discussion Papers 2000-03, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    18. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2018. "Global Firms," Journal of Economic Literature, American Economic Association, vol. 56(2), pages 565-619, June.
    19. Sofia Berto Villas-Boas, 2007. "Vertical Relationships between Manufacturers and Retailers: Inference with Limited Data," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(2), pages 625-652.
    20. repec:spo:wpmain:info:hdl:2441/eu4vqp9ompqllr09hc03295hg is not listed on IDEAS
    21. Federico Ciliberto & Elie Tamer, 2009. "Market Structure and Multiple Equilibria in Airline Markets," Econometrica, Econometric Society, vol. 77(6), pages 1791-1828, November.

    More about this item

    Keywords

    Demand and Price Analysis;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:asumwp:28542. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/msasuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.