IDEAS home Printed from https://ideas.repec.org/p/eei/rpaper/eeri_rp_2015_01.html
   My bibliography  Save this paper

Cournot Oligopoly, Homogeneous Products and Grappa Market: An Econometric Study

Author

Listed:
  • Laura Onofri
  • Vasco Boatto

Abstract

In this study, using scanner data, collected from super-market transactions in 2009, we estimate an eight equations simultaneous model with a 3SLS routine, with the objective to empirically analyze the Grappa market structure. Results show that the supply side of the Grappa market is characterized by an oligopolistic structure, where the dominant firms compete as oligopolists à la Cournot with homogeneous products. Firms’ competition is mostly played on the quantity grounds and mostly disregards product differentiation strategies. The dominant firms produce and supply a “cheap”, homogenous product. Interpretation of the results focus on cultural consumption of this very “ancient” liquor and corroborate previous studies, where hedonic analysis of the demand side has shown consumers’ very low/null implicit prices for the product differentiated characteristics.

Suggested Citation

  • Laura Onofri & Vasco Boatto, 2015. "Cournot Oligopoly, Homogeneous Products and Grappa Market: An Econometric Study," EERI Research Paper Series EERI RP 2015/01, Economics and Econometrics Research Institute (EERI), Brussels.
    • Handle: RePEc:eei:rpaper:eeri_rp_2015_01
    as

    Download full text from publisher

    File URL: http://www.eeri.eu/documents/wp/EERI_RP_2015_01.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ronald W. Cotterill & Tirtha Pratim Dhar, 2003. "Oligopoly Pricing with Differentiated Products: The Boston Fluid Milk Market Channel," Food Marketing Policy Center Research Reports 074, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    2. J. Levin & L. Einav, 2012. "Empirical Industrial Organization: A Progress Report," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 1.
    3. Cotterill, Ronald W., 1994. "Scanner Data: New Opportunities for Demand and Competitive Strategy Analysis," Agricultural and Resource Economics Review, Cambridge University Press, vol. 23(2), pages 125-139, October.
    4. Koch, Kristian & Onofri, Laura, 2006. "The Italian Grappa Market: An Analysis of Consumer Preferences Through Hedonic Price Analysis," Conference Papers 6654, University of Minnesota, Center for International Food and Agricultural Policy.
    5. Cotterill, Ronald W., 1994. "Scanner Data: New Opportunities For Demand And Competitive Strategy Analysis," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 23(2), pages 1-15, October.
    Full references (including those not matched with items on IDEAS)

    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. Basak Canan & Ronald W. Cotterill, 2006. "Strategic pricing in a differentiated product oligopoly model: fluid milk in Boston," Agricultural Economics, International Association of Agricultural Economists, vol. 35(1), pages 27-33, July.
    2. Dhar, Tirtha & Chavas, Jean-Paul & Cotterill, Ronald W. & Gould, Brian W., 2002. "An Econometric Analysis of Brand Level Strategic Pricing Between Coca Cola and Pepsi Inc," Working Papers 201553, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    3. Fred Kuchler & Abebayehu Tegene & J. Michael Harris, 2005. "Taxing Snack Foods: Manipulating Diet Quality or Financing Information Programs?," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(1), pages 4-20.
    4. Marchini, Andrea & Diotallevi, Francesco & Fioriti, Linda, 2011. "The analysis of competitive interdependencies through “Social Network Analysis”: the case study of extra-virgin olive oil," MPRA Paper 41468, University Library of Munich, Germany, revised 2011.
    5. Lee L. Schulz & Ted C. Schroeder & Tian Xia, 2012. "Studying composite demand using scanner data: the case of ground beef in the US," Agricultural Economics, International Association of Agricultural Economists, vol. 43, pages 49-57, November.
    6. Thompson, Gary D. & Wilson, Paul N., 1999. "Market Demands For Bagged, Refrigerated Salads," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(2), pages 1-19, December.
    7. Gould, Brian W., 1995. "Factors Affecting U.S. Demand For Reduced-Fat Milk," Staff Papers 12646, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    8. Kim, Donghun, 2004. "Market Structure, Price Pass-Through and Welfare with Differentiated Products," Research Reports 25157, University of Connecticut, Food Marketing Policy Center.
    9. Herrmann, Roland & Moser, Anke & Werner, Elke, 2002. "Neue empirische Befunde zur Preissetzung und zum Verbraucherverhalten im Lebensmitteleinzelhandel," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 51(02), pages 1-13.
    10. Cotterill, Ronald, 2007. "Market Definition and Market Power in the British Supermarket Industry," Research Reports 149201, University of Connecticut, Food Marketing Policy Center.
    11. Ochieng', Otieno Geoffrey, 2010. "Effect of Value Addition on Price: A Hedonic Analysis of Peanut in Retail Supermarkets in Nairobi, Kenya," Research Theses 134495, Collaborative Masters Program in Agricultural and Applied Economics.
    12. Revoredo-Giha, Cesar & Lamprinopoulou-Kranis, Chrysa & Kupiec-Teahan, Beata & Leat, Philip M.K. & Cacciolatti, Luca, 2009. "Cereal Prices, Bread Consumption and Health in Scotland," Working Papers 61121, Scotland's Rural College (formerly Scottish Agricultural College), Land Economy & Environment Research Group.
    13. Revoredo-Giha, Cesar & Leat, Philip M.K. & Toma, Luiza & Lamprinopoulou-Kranis, Chrysa & Kupiec-Teahan, Beata & Cacciolatti, Luca, 2009. "Wheat Prices, Bread Consumption and Health in Scotland," Working Papers 109395, Scotland's Rural College (formerly Scottish Agricultural College), Land Economy & Environment Research Group.
    14. Bergtold, Jason S. & Akobundu, Eberechukwu & Peterson, Everett B., 2004. "The FAST Method: Estimating Unconditional Demand Elasticities for Processed Foods in the Presence of Fixed Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(2), pages 1-20, August.
    15. Liang, Jing, 2010. "Three essays on food safety and foodborne illness," ISU General Staff Papers 201001010800002782, Iowa State University, Department of Economics.
    16. Revoredo-Giha, Cesar & Lamprinopoulou-Kranis, Chrysa & Toma, Luiza & Kupiec-Teahan, Beata & Leat, Philip M.K. & Cacciolatti, Luca, 2009. "Use of Supermarket Scanner Data to Measure Bread Consumption and Nutrition Choice in Scotland," 2009 Conference, August 16-22, 2009, Beijing, China 50399, International Association of Agricultural Economists.
    17. Cathy R. Wessells & Petter Wallström, 1999. "Modeling demand structure using scanner data: Implications for salmon enhancement policies," Agribusiness, John Wiley & Sons, Ltd., vol. 15(4), pages 449-461.
    18. Lavoie, Nathalie, 2001. "Price Discrimination In The Context Of Vertical Differentiation: A Modeling Approach For Wheat Exports," 2001 Annual meeting, August 5-8, Chicago, IL 20603, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    19. Vickner, Steven S. & Davies, Stephen P. & Fulton, Joan R. & Vantreese, Valerie L., 2000. "Estimating Market Power And Pricing Conduct For Private-Label And National Brands In A Product-Differentiated Oligopoly: The Case Of A Frozen Vegetable Market," Journal of Food Distribution Research, Food Distribution Research Society, vol. 31(2), pages 1-13, July.
    20. Liang, Jing & Fabiosa, Jacinto F. & Jensen, Helen H. & Miller, Gay Y., 2010. "Potential HPAI Shocks and Welfare Implications of Market Power in the U.S. Broiler Industry," ISU General Staff Papers 201001010800001021, Iowa State University, Department of Economics.

    More about this item

    Keywords

    Cournot oligopoly; 3SLS; scanner data; grappa market.;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:eei:rpaper:eeri_rp_2015_01. 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: Julia van Hove (email available below). General contact details of provider: https://edirc.repec.org/data/eeriibe.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.