Multi-category Competition and Market Power: A Model of Supermarket Pricing

Øyvind Thomassen, Howard Smith, Stephan Seiler and Pasquale Schiraldi ()

American Economic Review, 2017, vol. 107, issue 8, 2308-51

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 cross-category effects.

JEL-codes: D12 L11 L13 L81 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/aer.20160055
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (56)

Downloads: (external link)
https://www.aeaweb.org/articles?id=10.1257/aer.20160055 (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... td_CsDjVxl1xOnTfwUs5 (application/zip)
https://www.aeaweb.org/articles/attachments?retrie ... 0D88ylhh5U11cAFRoi7F (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... v_lg07MEUcy51laOoNMc (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Multi-category competition and market power: a model of supermarket pricing (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:107:y:2017:i:8:p:2308-51

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().