Sales Promotion and Cooperative Retail Pricing Strategies

Timothy Richards and Paul M. Patterson

No 28542, Working Papers from Arizona State University, Morrison School of Agribusiness and Resource Management

Abstract: Supermarket retailers make strategic pricing decisions in a high-frequency, repeated game environment both in buying and selling fresh produce. In this context, there is some question as to whether a non-cooperative equilibrium can emerge that produces margins above the competitive level. Supermarket pricing results from tacitly collusive equilibria supported by trigger price strategies played in upstream markets. Upstream activities are, in turn, driven by periodic retail price promotions. We test this hypothesis using a sample of fresh produce pricing data from 20 supermarket chains in markets distributed throughout the U.S. Our results support the existence of tacitly collusive non-cooperative equilibria in upstream and downstream markets.

Keywords: Demand; and; Price; Analysis (search for similar items in EconPapers)
Pages: 36
Date: 2004
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Journal Article: Sales Promotion and Cooperative Retail Pricing Strategies (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:asumwp:28542

DOI: 10.22004/ag.econ.28542

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