Journal article
Multi-category competition and market power: a model of supermarket pricing
- Abstract:
- In many competitive settings consumers buy multiple product categories, and some prefer to use a single firm, generating complementary cross-category price effects. To study pricing in supermarkets, an organizational form where these effects are internalized, we develop a multi-category multi-seller demand model and estimate it using UK consumer data. This class of model is used widely in theoretical analysis of retail pricing. We quantify cross-category pricing effects and find that internalizing them substantially reduces market power. We find that consumers inclined to one-stop (rather than multi-stop) shopping have a greater pro-competitive impact because they generate relatively large crosscategory effects.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
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Access Document
- Files:
-
-
(Preview, Accepted manuscript, pdf, 705.6KB, Terms of use)
-
- Publisher copy:
- 10.1257/aer.20160055
Authors
+ Department of the Environment, Food & Rural
Affairs
More from this funder
- Funding agency for:
- Smith, H
- Publisher:
- American Economic Association
- Journal:
- American Economic Review More from this journal
- Volume:
- 107
- Issue:
- 8
- Pages:
- 2308-51
- Publication date:
- 2017-08-01
- Acceptance date:
- 2017-03-14
- DOI:
- EISSN:
-
1532-5059
- ISSN:
-
0002-8282
- Pubs id:
-
pubs:686351
- UUID:
-
uuid:8418fb11-54d1-4cbc-b813-1189fab39aad
- Local pid:
-
pubs:686351
- Source identifiers:
-
686351
- Deposit date:
-
2017-03-19
Terms of use
- Copyright holder:
- American Economic Association
- Copyright date:
- 2017
- Notes:
- This is the accepted manuscript version of the article. The final version is available online from American Economic Association at: https://doi.org/10.1257/aer.20160055
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