Product differentiation and dynamics of cost pass-through in the German fish market: An error-correction-distance measure approach

Thomas Bittmann, Julia Bronnmann and Daniel V. Gordon

Journal of Commodity Markets, 2020, vol. 19, issue C

Abstract: Product differentiation is an important tool to target different consumer groups and to generate price premiums for different commodities. Product differentiation affects the level of competition, consumer costs and can alter the dynamics of cost pass-through. In this study, we focus on the natural differences in nutritional levels (omega-3, fats, proteins, vitamins) across fish species to differentiate fish products. We model and test the importance of nutritional differences as an explanatory factor in the dynamics of cost pass-through for different fish species in the German retail frozen fillet market. We combine a large consumer panel of fish purchases at the retail level with trade data on fish import prices covering the period January 2006 to December 2010. A distance measure is used to aggregate over product nutrients. Combining the distance measure within an error-correction equation shows that cost pass-through is (statistically) negatively correlated with the degree of product differentiation. Commodity differentiation matters in the dynamics of convergence to equilibrium.

Keywords: Cost pass-through; Product differentiation; Distance measure; Error-correction; German fish prices (search for similar items in EconPapers)
JEL-codes: L81 Q22 Q27 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2405851319300704
Full text for ScienceDirect subscribers only

Related works:
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:eee:jocoma:v:19:y:2020:i:c:s2405851319300704

DOI: 10.1016/j.jcomm.2019.100105

Access Statistics for this article

Journal of Commodity Markets is currently edited by Marcel Prokopczuk, Betty Simkins and Sjur Westgaard

More articles in Journal of Commodity Markets from Elsevier
Bibliographic data for series maintained by Catherine Liu ().