Multi-category competition and market power: a model of supermarket pricing

Øyvind Thomassen, Howard Smith, Stephan Seiler and Pasquale Schiraldi ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In many competitive settings consumers buy multiple product categories, and some prefer to use a single firm, generating complementary cross-category price effects. To study pricing in supermarkets, an organizational form where these effects are internalized, we develop a multi-category multi-seller demand model and estimate it using UK consumer data. This class of model is used widely in theoretical analysis of retail pricing. We quantify crosscategory pricing effects and find that internalizing them substantially reduces market power. We find that consumers inclined to one-stop (rather than multi-stop) shopping have a greater pro-competitive impact because they generate relatively large cross-category effects

JEL-codes: L11 L13 L81 (search for similar items in EconPapers)
Date: 2017-08-01
New Economics Papers: this item is included in nep-com, nep-ind and nep-mkt
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Citations: View citations in EconPapers (54)

Published in American Economic Review, 1, August, 2017, 107(8), pp. 2308-2351. ISSN: 0002-8282

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Related works:
Journal Article: Multi-category Competition and Market Power: A Model of Supermarket Pricing (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:69855

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