The impact of cross-sectional data aggregation on the measurement of vertical price transmission: An experiment with German food prices

Stephan von Cramon-Taubadel, Jens-Peter Loy and Jochen Meyer ()
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Jens-Peter Loy: Department of Agricultural Economics, University of Kiel, Olshausenstraße 40, D-24118 Kiel, Germany, Postal: Department of Agricultural Economics, University of Kiel, Olshausenstraße 40, D-24118 Kiel, Germany

Agribusiness, 2006, vol. 22, issue 4, 505-522

Abstract: The impact of cross-sectional aggregation over individual retail stores on the estimation and testing of vertical price transmission between the wholesale and retail levels is investigated using a unique data set of individual retail prices in Germany. Systematic differences between the results of estimations using aggregated data on the one hand, and disaggregated data on the other, are discussed theoretically and confirmed empirically. The results suggest that estimation with aggregated data can generate misleading conclusions about price transmission behavior at the level of the individual units (i.e., retail stores) that underlie these aggregates. [JEL classifications: C22, L11, D40] © 2006 Wiley Periodicals, Inc. Agribusiness 22: 505-522, 2006.

Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:22:y:2006:i:4:p:505-522

DOI: 10.1002/agr.20100

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