Estimating strategic price response in a product-differentiated oligopoly: The case of a domestic canned fruit industry

Steven Vickner and Stephen P. Davies
Additional contact information
Stephen P. Davies: Department of Agricultural and Resource Economics, Colorado State University, Ft. Collins, CO 80523-1172, Postal: Department of Agricultural and Resource Economics, Colorado State University, Ft. Collins, CO 80523-1172

Agribusiness, 2000, vol. 16, issue 2, 125-140

Abstract: In this article, we empirically estimate the strategic price response in a domestic canned fruit industry using national-level, weekly point-of-purchase scanner data. Augmented Dickey-Fuller tests are used to obtain univariate time series properties of Del Monte and Dole's canned pineapple prices. Johansen's likelihood ratio cointegration test is used to characterize the existence of an industry pricing equilibrium. Vector autoregression and vector error correction models are employed to examine the multivariate time series properties of the two firms' prices. Granger causality tests are used to address the price leadership hypothesis, while impulse response functions are constructed to chronicle the intertemporal price response to an innovation in a rival's price series. The battery of tests indicates that Del Monte follows Dole's pricing decisions in this narrowly defined product market. A thorough understanding of empirical price reactions has far-reaching strategic management implications, such as forecasting a rival's response and avoiding costly price wars. [L110, L200, L660] © 2000 John Wiley & Sons, Inc.

Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:wly:agribz:v:16:y:2000:i:2:p:125-140

DOI: 10.1002/(SICI)1520-6297(200021)16:2<125::AID-AGR1>3.0.CO;2-8

Access Statistics for this article

Agribusiness is currently edited by Ronald W. Cotterill

More articles in Agribusiness from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().