FOOD RETAIL SALES (PRICING): THEORY AND EMPIRICAL EVIDENCE FOR GERMAN GROCERY STORES

Retail pricing indicates many phenomena, such as sales or rigidities. A number of models have been proposed in particular to explain the occurrence of sales. Focussing on the market for fresh foods the model by Varian and the loss leader argument seem to be intuitively best fitting to the conditions in the fresh food market. From these models we derive several hypotheses that are tested for a unique data set of the German fresh food retail market The data set consists of weekly prices for ten food items in 131 grocery shops over the period from 1995 to 2000. The results support to some extent the Varian model and also indicate some dynamic loss leader pricing. However, rejections of some hypothesis provide some hints for successive models adjustments. Promising extensions of the theory might be based on the consideration of menu and switching costs.


Subject(s):
Issue Date:
2002
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/19787
Total Pages:
27
Series Statement:
Selected Paper




 Record created 2017-04-01, last modified 2017-08-24

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