Issues in UK food retail pricing
Mañez Castillej, Juan Antonio (1999) Issues in UK food retail pricing. PhD thesis, University of Warwick.
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Official URL: http://webcat.warwick.ac.uk/record=b1365703~S1
In this PhD we analyse some topics about food-retail pricing behaviour from the point of view of the empirical industrial organisation. Large UK supermarkets chains are actively involved in quality discrimination; they offer three quality variants for most of the products they sell. These quality variants are from higher to lower quality: branded products, high quality own brand products and low quality own brands. Hence, the first two empirical chapters of this PhD are aimed at studying the implications of the supermarkets chains multiquality nature over supermarkets patterns of price competition. The first of these chapters compares the pattern of price dispersion and price competition for each quality variant. In the second of them we build an econometric model that allows to take into account the effects of competition over the price setting for each quality variant of: different quality variants sold at the same supermarkets, and variants of the same and different quality sold at different supermarkets. The results of these two chapters suggest that competition is less intense for the quality variant with greater possibilities of supermarket product differentiation, the high quality own brand products. The joint consideration of this softer price competition and the higher market share of this quality variant in UK food retailing (if compared with continental food retailing) offers a new explanation for the high profits enjoyed by the UK supermarkets in comparison with their continental counterparts. Claims for antitrust actions against low-price guarantees have been quite common in the USA for some time now. In the UK, the report "Competition in Retailing" written by London Economics for the Office of Fair Trade recognises the anticompetitive effects of low-price guarantees. However, the analysis of Tesco 's Unbeatable Value low-price guarantee did not detect any anticompetitive effect. Tesco 's Unbeatable value triggered a process of reduction of the prices of the products included in the guarantee. Further analysis of the data and the consideration of the supermarket as a multiproduct firm lead us to analyse the possible relationship between this low-price guarantee and a lossleaders strategy. Our analysis seriously advises to reconsider the effects of low-price guarantees when the firms offering them are multiproduct firms. • Large UK supermarket chains face not only the competiticin of other supermarkets but also the competition of discounters. Whereas large UK supermarkets chains offer a homogeneous level of service quality, the level of service quality offered by the discounters is manifestly lower. We propose a model controlling both for locational asymmetries and service quality differentials to analyse the ability of service quality as a market segmentation tool. Also with the aim of analysing this segmentation ability, we study the differential effects of Tesco 's Low Price Guarantee over a supermarket and a discounter store affected by it. The results of these two analysis confirm the ability of service quality differentials to segment the market and advice the consideration of supermarkets and discounters as forming part of two different relevant markets. All the empirical analysis is carried out using a panel of prices that were collected in three supermarkets and a discounter in the south area of Coventry.
|Item Type:||Thesis or Dissertation (PhD)|
|Subjects:||H Social Sciences > HB Economic Theory|
|Library of Congress Subject Headings (LCSH):||Food prices -- Great Britain, Supermarkets -- Great Britain -- Economic aspects, Tesco (Firm)|
|Institution:||University of Warwick|
|Theses Department:||Department of Economics|
|Supervisor(s)/Advisor:||Waterson, Michael, 1950- ; Hviid, Morten|
|Sponsors:||Fundación Ramón Areces|
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