RETAIL SALES: DO THEY MEAN REDUCED EXPENDITURES? GERMAN GROCERY EVIDENCE

Retail pricing strategies incorporate promotions, sales, and rigidities. A number of models have been proposed in particular to explain the occurrence of sales. Focussing on the market for fresh foods the model by Varian and the loss leader argument seem to be intuitively best fitting to the conditions in the fresh food market. From these models we derive several hypotheses that are tested for a unique data set of the German fresh food retail market. The data set consists of weekly prices for ten food items in 131 grocery shops over the period from 1995 to 2000. Following Varian sales should lead to reduced expenditures, while the loss leader argument assumes that consumers are lured into the shop by promotional sales which are covered by higher prices for other products. The results indicate that expenditures decrease with the number of sales in the short run but this effect is outweighed by a dynamic price adjustment thereafter.Food Consumption/Nutrition/Food Safety, Marketing,

FOOD RETAIL SALES (PRICING): THEORY AND EMPIRICAL EVIDENCE FOR GERMAN GROCERY STORES

Retail pricing indicates many phenomena, such as sales or rigidities. A number of models have been proposed in particular to explain the occurrence of sales. Focussing on the market for fresh foods the model by Varian and the loss leader argument seem to be intuitively best fitting to the conditions in the fresh food market. From these models we derive several hypotheses that are tested for a unique data set of the German fresh food retail market The data set consists of weekly prices for ten food items in 131 grocery shops over the period from 1995 to 2000. The results support to some extent the Varian model and also indicate some dynamic loss leader pricing. However, rejections of some hypothesis provide some hints for successive models adjustments. Promising extensions of the theory might be based on the consideration of menu and switching costs.Marketing,

Commodity Price Volatility under New Market Orientations

Recent national and international regulatory reforms (e.g. U.S. FAIR and other GATT compliance reforms) in agricultural markets has led some observers to wonder whether the private sector is able to produce a level of price volatility that is socially acceptable. In this paper, we examine the post reform track record of price volatility and its transmission across vertically linked and geographically linked markets. Livestock, grain, and dairy market data (monthly) are considered across the U.S. and E.C. The standard commodity-pricing model supports the hypothesis that competitive storage acts to reduce the volatility of cash prices. Further, speculative attacks and stock outs have been shown to induce increased volatility. This motivates a scope of consideration that includes prices as well as stock levels to assess their contribution to price volatility. The paper considers evidence based on three decades of monthly data and advanced time series techniques. First, univariate volatility estimates based on the autoregressive conditional heteroskedasticity (GARCH) model are evaluated and compared to historical temporal variation to highlight the importance of well grounded estimation of volatility. Next, the relationships between stocks and the conditional mean, as well as the conditional and unconditional variances of the price series, are assessed for dairy and grain products. Finally, reform associated changes in the structure of the transmission of volatility through vertical markets are considered for dairy products and across geographic markets is considered for grains.Price volatility; price risk; inventories; commodity prices;

THE TRANSMISSION OF PRICE VOLATILITY IN THE BEEF MARKETS

This paper reconsiders the implications of efficient markets for transmission of price volatility across markets. Tests of volatility transmission are based on conditional variances. Results are reported for key grain and beef markets. Transmission across cash, futures, and options is considered.Cointegration, GARCH, Market Efficiency, Beef Markets, Demand and Price Analysis, Livestock Production/Industries,

Price and tax policy for semi-subsistence agriculture in Ethiopia

In the case of semi-subsistence agriculture where wage employment is not available, the role played by prices and taxes in determining production and consumption decisions is not clearly established by economic theories of household choice. This study demonstrates that where choices in production, consumption, and leisure can be made independently, farmers will decide what to grow on the basis of their preferences for marketed goods. The paper also points out that the choice will be affected by the level and type of taxation imposed. The paper shows the impact of four taxes -- agricultural revenue, land, production and marketed goods consumption -- on crop production and tax revenues. This paper also reports on a model of production in Ethiopia. The results of this study give strong evidence of the role of producer and consumer prices in semi-subsistence agriculture. In addition, the results show the importance of production capacity, household and climatic factors in agricultural development.Environmental Economics&Policies,Economic Theory&Research,Crops&Crop Management Systems,Agricultural Knowledge&Information Systems,Consumption

MARKET STRUCTURE AND THE DYNAMICS OF RETAIL FOOD PRICES

The effect of retail grocery market structure on the speed of adjustment of retail food prices to changes in producer prices, real wages, and the cost of energy was examined for SMSAs. Evidence failed to support the implication of the Mason-Bain paradigm that increased concentration reduces market efficiency as reflected in speed of retail price adjustment. Evidence of strong intertemporal relationships between change in producer prices and retail prices found for the categories meat, poultry, fish, eggs and cereal and baker products provide support to the hypothesis of cost-push inflation.Marketing,

Technical Efficiency Effects of Technological Change: Another Perspective on GM Crops

An important approach to reducing persistent technical inefficiency is through technical change. This paper considers the case of genetically modified crop production. A stochastic frontier approach is used to examine how a drastic change from non-GM to GM technology effects the position of the production frontier as well as the extent and nature of technical inefficiency. A one-step method is applied to consider firm-level effects on technical inefficiency. Using soybean production from the U.S. we find that GM technology improves productivity and reduces technical inefficiency though these effects vary across farm characteristics.technical efficiency, technical change, genetically-modified, soybean, Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies, D24, O33,

Designing Crop Insurance to Manage Moral Hazard Costs

A new crop insurance model based on just random risk (natural states) is presented instead of traditional model based on random risk, guaranteed price, and guaranteed yield. The simulation approach shows how the incentive compatibility constraints resolve the moral hazard problem by the insured under the insurer-agency crop insurance contracting.Risk and Uncertainty,

TARGETING ENVIRONMENTAL PROTECTION IN AGRICULTURE: IPM AND BMPS AS ENVIRONMENTAL PERFORMANCE INDICATORS

Nonparametric technical efficiency estimates of potentially polluting input use in soybean and wheat indicate substantial heterogeneity across farms. This implies large costs would be associated with uniform standards or incentives to regulate these inputs. While technical efficiency is not observable, indicators of environmentally beneficial practices are found useful predictors.technical efficiency, DEA, environment performance, pollution, Environmental Economics and Policy,

FORWARD CONTRACTING SPECIFICATION THROUGH COLLECTIVE BARGAINING

Game-based bargaining theory is presented to evaluate the potential of and stability of cooperative coalition among producers for enhancing producer returns and managing market price and income risk. Results clarify that collective bargaining can increase and stabilize producer profits when they face a single processor.Research Methods/ Statistical Methods,