Retail Market Power in a Shopping Basket Model of Supermarket Competition

Timothy Richards and Stephen Hamilton

No 235801, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: Supermarket consumers typically purchase more than one item at a time. Retail prices, in turn, are likely to depend on demand relationships between multiple categories of goods in consumers' shopping baskets. In this paper, we develop a model of retail price competition that explicitly models the effect of complementary demand relationships between products that appear in consumer shopping baskets. We derive inferences for retail market power when shopping baskets contain products from complementary categories and compare outcomes with the predictions derived from conventional models that assume consumers make discrete choices among independent product categories. Our findings reveal that cross-category product complementarity in consumer shopping baskets facilitates substantially greater retail market power relative to the benchmark case of discrete choice over independent goods.

Keywords: Industrial; Organization (search for similar items in EconPapers)
Pages: 38
Date: 2016
New Economics Papers: this item is included in nep-com and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://ageconsearch.umn.edu/record/235801/files/R ... ricing_AAEA_Text.pdf (application/pdf)

Related works:
Journal Article: Retail Market Power in a Shopping Basket Model of Supermarket Competition (2018)
Working Paper: Retail Market Power in a Shopping Basket Model of Supermarket Competition (2017)
Working Paper: Retail Market Power in a Shopping Basket Model of Supermarket Competition (2015)
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:ags:aaea16:235801

DOI: 10.22004/ag.econ.235801

Access Statistics for this paper

More papers in 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().