4.3 Article Book Chapter

Pricing Strategies of Food Retailers

Journal

ANNUAL REVIEW OF RESOURCE ECONOMICS, VOL 12
Volume 12, Issue -, Pages 87-110

Publisher

ANNUAL REVIEWS
DOI: 10.1146/annurev-resource-101619-094219

Keywords

food retailing; industrial organization; pricing strategy; retailing; vertical relationships

Funding

  1. Agricultural and Food Research Initiative (National Institute for Food and Agriculture, US Department of Agriculture) [2016-09900]

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Studies examining pricing outcomes in the food retail industry are complicated both by the multiproduct nature of transactions and by the presence of highly concentrated food processing and retailing industries that mediate between relatively competitive farm product markets and the consumer market. In this review, we examine theoretical and empirical evidence for retail pricing and the vertical relationships that have emerged among retailers, food manufacturers, and farmers. We first focus our analysis on consumer behavior in multiproduct retail markets, including consumer search, habit formation, and reference pricing, and then discuss retail market outcomes for price discrimination, price fairness, and price obfuscation. We then turn to relationships between retailers and food manufacturers through bargaining outcomes, market foreclosure, and slotting allowances, and discuss the resulting implications for retail-price pass-through.

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