Year: 2014
Author: Loy, Jens-Peter, Schaper, Fabian
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 134 (2014), Iss. 1 : pp. 25–60
Abstract
In this paper, the proportions and determinants of price rigidity in German food retailing are investigated for selected products. In measuring price rigidity, we explicitly consider promotional sales by excluding price promotions. Price promotions cause a significant part of retail price variations, but are by definition not based on cost changes. Thus, if price promotions are not considered, price rigidity measures are biased. The average estimated duration of rigid prices in supermarkets increases from forty to sixty weeks, if price promotions are excluded. All food products show considerable price rigidities. In particular, key products with a high level of consumers" attention indicate significantly lower price rigidities. Psychological prices are more rigid than others. Unexpectedly, high price (national) brands exhibit greater price flexibility than low price private labels. From this we may conclude that rigid food retail prices are not caused by retail market power, but by implementing an „every day low price" retailing strategy.
Journal Article Details
Publisher Name: Global Science Press
Language: German
DOI: https://doi.org/10.3790/schm.134.1.25
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 134 (2014), Iss. 1 : pp. 25–60
Published online: 2014-01
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 36
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