Retailers' response to wholesale price changes: new evidence from scanner-based quantity-weighted beef prices

Christian Rojas, Alexandra Andino and Wayne D. Purcell
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Christian Rojas: Department of Resource Economics, University of Massachusetts-Amherst, Amherst, MA 01003, Postal: Department of Resource Economics, University of Massachusetts-Amherst, Amherst, MA 01003
Alexandra Andino: Department of Agricultural and Applied Economics, Virginia Tech, Blacksburg, VA 24061, Postal: Department of Agricultural and Applied Economics, Virginia Tech, Blacksburg, VA 24061
Wayne D. Purcell: Department of Agricultural and Applied Economics, Virginia Tech, Blacksburg, VA 24061, Postal: Department of Agricultural and Applied Economics, Virginia Tech, Blacksburg, VA 24061

Agribusiness, 2008, vol. 24, issue 1, 1-15

Abstract: Retailers are often criticized for a slow response in retail prices to changes in wholesale beef prices. The unresponsiveness, especially when wholesale and farm prices are declining, is seen as a lack of competitiveness and as a reason for congressional action to regulate behavior of processors or retailers. The validity of the historical analyses of retailer price responsiveness is questionable, however. Traditional Bureau of Labor Statistics (BLS) retail beef prices biased upward and do not account for large volumes sold at discounted prices. This article uses newly available scanner-based quantity-weighted retail prices to suggest that retailers' response to changes in wholesale beef prices is significantly larger and possibly quicker than is shown by traditional BLS measures of retail prices. Recent efforts to prompt legislation to regulate how firms behave along the beef supply chain, which are based only on arguments that retailers are not responding to price changes at the wholesale level, may be inappropriate. [L110, L660, D400] © 2008 Wiley Periodicals, Inc.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:24:y:2008:i:1:p:1-15

DOI: 10.1002/agr.20143

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