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Food Retailers' Pricing and Marketing Strategies, with Implications for Producers

Published online by Cambridge University Press:  15 September 2016

Lan Li ,
Richard J. Sexton  and
Tian Xia
Lan Li
Affiliation:
Department of Economics and Finance at La Trobe University in Melbourne, Australia
Richard J. Sexton
Affiliation:
Department of Agricultural and Resource Economics at the University of California, Davis
Tian Xia
Affiliation:
Department of Agricultural Economics at Kansas State University in Manhattan, Kansas
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Abstract

This paper examines grocery retailers' ability to influence prices charged to consumers and paid to suppliers. We discuss how retailer market power manifests itself in terms of pricing and marketing strategies by setting forth and offering evidence in support of eight “stylized facts” of retailer pricing and brand decisions. We argue that little, if any, of this behavior can be explained by a model of a competitive, price-taking retailer, but that most of the indicated behavior was also inconsistent with traditional models of market power. Finally, we discuss the impacts of aspects of this retailer behavior on the upstream farm sector.

Keywords

grocery retailermarket powerprice spreadsales
Type
Invited Papers
Information
Agricultural and Resource Economics Review , Volume 35 , Issue 2 , October 2006 , pp. 221 - 238
Copyright
Copyright © 2006 Northeastern Agricultural and Resource Economics Association 

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