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Supermarket Competition through Price Promotions: A Cross Category Analysis

Volpe, Richard J.,

No 49582, 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin from Agricultural and Applied Economics Association

Abstract: This study takes an important first step at quantifying the nature of competition between major supermarket chains through price promotions. Using data that covers virtually the entire product menus of supermarkets representing two major chains in 18 cities, I examine both the effect of direct competition on promotional intensity and the nature of promotional competition itself. In a counterintuitive finding, there appears to slightly less promotional activity in cities in which both chains compete directly, as compared to cities in which only one chain operates. Moreover, most promotional activity tends to be retaliatory, rather than accommodating, in nature. This study takes an important first step at quantifying the nature of competition between major supermarket chains through price promotions. Using data that covers virtually the entire product menus of supermarkets representing two major chains in 18 cities, I examine both the effect of direct competition on promotional intensity and the nature of promotional competition itself. In a counterintuitive finding, there appears to slightly less promotional activity in cities in which both chains compete directly, as compared to cities in which only one chain operates. Moreover, most promotional activity tends to be retaliatory, rather than accommodating, in nature.

Keywords: Agribusiness; Demand and Price Analysis (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-mkt
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea09:49582

DOI: 10.22004/ag.econ.49582

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