Supermarket fluid milk pricing practices in the Western United States

This study analyzes retail milk pricing by supermarkets and marketing margin behavior for four fluid milk products in nine large metropolitan markets in the Western United States. Multiple empirical approaches are utilized to investigate retailer pricing behavior, and, on balance, these methods prov...

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Bibliographic Details
Published in:Agribusiness (New York, N.Y.) N.Y.), 2005, Vol.21 (4), p.509-530
Main Authors: Carman, H.F, Sexton, R.J
Format: Article
Language:English
Subjects:
Agribusiness
cities
Correlation analysis
dairy industry
demand elasticities
econometric models
farm-to-retail price spread
market competition
market power
market prices
marketing strategies
Metropolitan areas
Milk
milk prices
monopoly
Pricing policies
profits and margins
retail marketing
skim milk
Studies
Supermarkets
urban areas
whole milk
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Summary:This study analyzes retail milk pricing by supermarkets and marketing margin behavior for four fluid milk products in nine large metropolitan markets in the Western United States. Multiple empirical approaches are utilized to investigate retailer pricing behavior, and, on balance, these methods provide significant evidence of noncompetitive price behavior in each of the markets. Correlations of retail price changes indicate considerable pricing independence among retailers across cities, while rankings of retail prices by milk product provide significant evidence that prices are not based primarily on costs, as would be true if pricing were competitive. Estimated retail price responses to farm price changes are consistent with monopoly pricing behavior for several of the milk products in several of the markets. [EconLit Citations: L660, L810]. © 2005 Wiley Periodicals, Inc. Agribusiness 21: 509–530, 2005.
ISSN:0742-4477
1520-6297
DOI:10.1002/agr.20062