Supermarket fluid milk pricing practices in the western United States
Hoy Carman and
Richard J. Sexton
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Richard J. Sexton: Department of Agricultural and Resource Economics, University of California, One Shields Avenue, Davis, California 95616, Postal: Department of Agricultural and Resource Economics, University of California, One Shields Avenue, Davis, California 95616
Agribusiness, 2005, vol. 21, issue 4, 509-530
This study analyzes retail milk pricing by supermarkets and marketing margin behavior for four fluid milk products in nine large metropolitan markets in the Western United States. Multiple empirical approaches are utilized to investigate retailer pricing behavior, and, on balance, these methods provide significant evidence of noncompetitive price behavior in each of the markets. Correlations of retail price changes indicate considerable pricing independence among retailers across cities, while rankings of retail prices by milk product provide significant evidence that prices are not based primarily on costs, as would be true if pricing were competitive. Estimated retail price responses to farm price changes are consistent with monopoly pricing behavior for several of the milk products in several of the markets. [EconLit Citations: L660, L810]. © 2005 Wiley Periodicals, Inc. Agribusiness 21: 509-530, 2005.
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