Understanding Dynamic Retail Competition Through the Analysis of Strategic Price Response Using Time Series Techniques

This paper analyzes strategic retail pricing behavior in fluid milk in Boston and New York market using reduced form time series analysis. Pricing in Boston market is found to be more strategic than in the New York market. Plausible reasons can be due to retail pricing laws, ownership structures of retail chains, and brand loyalty. This paper also looks at the impact of North East Dairy Compact on retail pricing in Boston. Strategic pricing behavior in the Boston market changed dramatically and became less competitive after the Compact.