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The Influence of Scale on the Measurement of the Vertical Price Transmission

dc.contributor.advisorvon Cramon-Taubadel, Stephan Prof. Dr.
dc.contributor.authorTifaoui, Said
dc.titleThe Influence of Scale on the Measurement of the Vertical Price Transmissionde
dc.contributor.refereeBrümmer, Bernhard Prof. Dr.
dc.description.abstractengMeasuring vertical price transmission (VPT) has become a widespread means to evaluate the performance of food value chain. To do so, agricultural economists employ time series methods on spatially aggregated data of prices at a regional/ national level. The conclusions of these studies are sometimes used to derive conclusions on the behavior of individual economic agents, e.g. retailers. This is based on a strong (implicit) assumption that the results derived from the studies using aggregated data apply, at least on average, at the disaggregated level. Two main issues could result from this assumption. First, measuring VPT using aggregated data to derive conclusions on individual behavior can be misleading on the real performance of the value chain. For instance, the retail sector can be studied as an aggregate by using weighted averages on retail prices to check how the sector transmits changes in prices from the upstream (wholesale) to the downstream of the value chain. The results of such studies can only provide an imprecise picture on how every retail store included in the weighted averages transmits its prices individually. Second, units under statistical investigation are likely to behave very differently when studied on different scales (e.g., aggregated/ disaggregated). For instance, while aggregated retail prices display unit root behavior, a typical retail price at the store level tends to persist and most deviations from the “regular” price are negative. This is often because of temporary sales prices (TSP) or promotions. The magnitude of the use of these marketing tools varies across store formats. For instance, hypermarket use High-Low pricing strategy‚ whereas the discount stores employ everyday low pricing strategy. These differences in the pricing strategies of the chains can lead to different outcomes on how they transmit the prices. Therefore, academic research has recently started to use disaggregated scanner data to assess VPT, which can help to cast light on how prices are transmitted at the individual retail chain; however, finding consistent methods to employ is a challenge. For instance, to capture price dynamics, the most common approach is the use of first difference in prices, which are mostly zero at the individual retail stores because at this level retail prices are rigid. This dissertation addresses these literature gaps by studying the VPT at the individual retail store. Building up on three paper, each paper deals with each of the aforementioned issues. The first paper explicitly studies the impact of TSP on VPT processes. The results of this paper show that TSP increase the speed and asymmetry of VPT, which add a potential cause of asymmetry to those that have already been identified in the literature. The second paper builds on the results of the first one. After filtering out the TSP, we investigate why VPT for the same product is symmetric within some retail chains and asymmetric within others. We show that asymmetric pricing depends on store membership to a specific chain and that market power expresses itself in the adoption of a specific pricing strategy, namely: Every Day Low Pricing or High-Low, which in turn can lead to different outcomes, including asymmetric pricing in VPT. Finally, in the third paper of this dissertation, we provide some new insights on how prices are determined and transmitted at the individual retail store. We employ an approach which consists in linking dichotomous retail chains’ decision of changing prices versus displaying rigid prices to factors such as retail marketing
dc.contributor.coRefereeKneib, Thomas Prof. Dr.
dc.subject.engvertical price transmissionde
dc.subject.engscaling problems in statisticsde
dc.subject.enggeneralized linear mixed modelsde
dc.subject.enghierarchical multilevel modellingde
dc.affiliation.instituteFakultät für Agrarwissenschaftende
dc.subject.gokfullLand- und Forstwirtschaft (PPN621302791)de

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