Spatial transmission of price promotion for German beer retailers

Yanjun Ren, Xiaofei Li and Jens-Peter Loy

Regional Studies, 2023, vol. 57, issue 10, 1967-1980

Abstract: The existing literature has extensively discussed the role of retail promotions, while the spatial effects of promotions are poorly understood. Using panel data of weekly promotional prices from German beer retailers during the period 2000–12, we examine the spatial effects of promotions based on spatial panel estimations. Results show significantly positive spatial effects of beer price promotions, indicating that neighbouring retailers’ promotions boost each other. We further find significant heterogeneity of spatial effects of price promotions across market power, peak demand and consumer loyalty. In addition, the positive spatial effects of price promotions are largely from retailers’ retaliation to competitors’ promotions.

Date: 2023
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DOI: 10.1080/00343404.2022.2137296

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