The Impact of the Internet on Retail Competition: Evidence from Technological Differences in Internet Access

Does the internet increase competition? To address this question, I exploit two institutional details unique to Germany: (1) Some municipalities received glass fibre cables that cannot be upgraded to DSL; I use these municipalities as a treatment group with reduced online competition. (2) German law mandates resale price maintenance for books; I compare three retailing sectors, electronics (price competition), books (no price competition), and food (no online sales), to identify the effect of price competition: The effect of price competition is highly significant. Full broadband access reduces offline electronics retailers’ producer rents by 1.5 percent per year from 1999 to 2007

The effects of win-win conditions on revenue-sharing contracts

This paper studies revenue-sharing contracts in distribution chains in the presence of win-win conditions. Revenue-sharing contracts are a mechanism to coordinate the firms in a distribution chain. Under these contracts the retailer shares its revenue with the supplier in exchange for a lower wholesale price. The win-win conditions are natural conditions requiring that the profit of any firm may not decrease after implementing the revenue-sharing contract. If these conditions are not met, that is, if at least one firm is confronted with decreased profits, the firms will not agree upon signing the contract and the revenue-sharing contract will not be implemented. We show that the win-win conditions result in a smaller range of contracts being offered by the supplier. More important, in case of multiple competing retailers there may be no revenue-sharing contract satisfying these conditions. Hence, in the presence of win-win conditions revenue-sharing contracts are not suitable for distribution chains with a supplier and multiple competing retailers. For these chains we present a simple alternative coordination mechanism that coordinates the chain and satisfies all win-win conditions. \u

The Impact of the Internet on Retail Competition: Evidence from Technological Differences in Internet Access

Does the internet increase competition? To address this question, I exploit two institutional details unique to Germany: (1) Some municipalities received glass fibre cables that cannot be upgraded to DSL; I use these municipalities as a treatment group with reduced online competition. (2) German law mandates resale price maintenance for books; I compare three retailing sectors, electronics (price competition), books (no price competition), and food (no online sales), to identify the effect of price competition: The effect of price competition is highly significant. Full broadband access reduces offline electronics retailers’ producer rents by 1.5 percent per year from 1999 to 2007.Internet; Market Structure; Retail Competition; Differences in Differences

Countercyclical Price Movements during Periods of Peak Demand: Evidence from Grocery Retail Price for Avocados

Using a unique micro dataset and advanced panel models, this study examines the effects of demand shocks on grocery retail price for avocados, a key Californian fresh produce commodity. Retail prices for avocados exhibited countercyclical movements over seasonal demand shocks for avocados associated with some holidays and events. Demand for avocados is shown to be higher during some holidays/events, e.g., Christmas/New Year, Super Bowl Sunday, and Cinco de Mayo. Super Bowl Sunday and Cinco de Mayo are identified as holidays/events associated with idiosyncratic demand peaks for avocados, but not associated with high aggregate consumer demand. Retail price and margin were significantly lower during some holidays/events associated with high demand for avocados, e.g., Christmas/New Year, Super Bowl Sunday, and Cinco de Mayo. The study also shows that the increase in demand and decrease in retail price during holidays/events with demand peaks for avocados was present for both large and small sizes of avocados, and the size of demand increases and the size of price reductions were not statistically different between large and small size of avocados. Furthermore, shipping price did not change or increased slightly, and hence moved opposite from retail the price during most holidays/events with high demand for avocados. We examine and test the predictions by four classes of theories that put forward to explaining countercyclical price movements over demand peaks. Overall, the evidence provides support for the Lal and Matutes (1994) model that retailers reduce retail prices and/or margins during a commodity's high-demand periods, but does not support alternative explanations for countercyclical price movements, such as Bernheim and Whinston (1990), Warner and Barskey (1995), or Nevo and Hatzitaskos (2006). The findings are consistent with the findings by Chevalier, Kashyap, and Rossi (2003). The study estimates the effects of the CAC's promotion programs on retail sales, retail price, and shipping price at disaggregate level. The analysis demonstrates that the CAC's promotion programs were associated with positive retail sales. In particular, the evidence from the long-panel data suggests that the CAC's promotion programs were successful in raising avocado sales. There is no evidence that retailers charged higher prices during the CAC's promotions.retail price, retail price determination, countercyclical price movement, dynamic panel model, GMM, Demand and Price Analysis,

Grocery Retailer Pricing Behavior for California Avocados with Implications for Industry Promotion Strategies

Rising concentration and consolidation of sales among large supermarket chains in the U.S. and other countries, due in part to a recent wave of mergers in food retailing, have made retailers' role in the food industry a topical issue. Using a unique micro dataset, this paper investigates retailer pricing issues for avocados, a key California specialty commodity, and analyzes the implications of retailer pricing behavior for the effectiveness of avocado industry advertising programs. The methodologies developed and the results achieved in this study should have broad applications across the produce sector, the food industry, and the grocery retail market. We find that retail prices for avocados are highly dispersed both spatially and temporarily. The analysis also illustrates the existence of a "regular" retail price for avocados. Downward deviations from the "regular" price dominated changes in retail prices, in particular, temporary price reductions accounted for 27 percent of retail price variations. The study examines the effects of fundamental cost and demand factors on determination of retail prices. We conclude that costs are not a primary factor in setting retail prices for avocados. Retailers' sales strategies, which reflect decreases in retail margins rather than decreases in costs, explained much of the observed temporary price reductions for avocados. Retail prices for avocados also exhibited countercyclical movements over seasonal demand cycles. The findings provide support for Lal and Matutes' (1994) hypothesis that retailers reduce prices or margins during a product's high-demand periods. We investigate how retailers respond to industry promotions and, in turn, how retailer response enhances or vitiates the effectiveness of industry promotions. The approach of "Difference-in-Difference" is employed to evaluate the effects of the California Avocado Commission's (CAC) promotion programs on retail pricing and sales. The analysis demonstrates that the radio campaign and outdoor advertisements were successful in raising avocado sales. There is no evidence that retailers charged higher prices during the CAC's promotions. Nonetheless, the CAC's promotion programs could be enhanced if retailers were better informed about the advertising campaigns. Other noteworthy results include the fact that retail margins increased significantly as shipment volumes increased, indicating the presence of retailer oligopsony power. Also notable was the rather strong evidence that retail prices were significantly lower as a function of the amount of avocados imported from Chile and Mexico, meaning that consumers have benefited from trade liberalization for avocados.F13, L1, L81, Q1, Q13, Demand and Price Analysis, Marketing,

Market Foreclosure and Strategic Aspects of Vertical Agreements

This paper reviews the arguments about market foreclosure –as an incentive for vertical agreements between upstream and downstream firms– and its effects on welfare. We consider that downstream firms compete in quantities in the final good market and upstream firms compete in quantities in the intermediate good market. In this context we show that a vertical agreement must not contemplate market foreclosure, that is, upstream firms continue participating in intermediate market. Regarding antitrust policy, we show that even vertical agreements aimed at increasing input price faced by other firms may be positive from the welfare viewpoint.

Agency Theory and Supply Chain Management: Goals and Incentives in Supply Chain Organisations

Purpose Agency theory (AT) offers opportunities to examine how the risk of opportunism can be prevented or minimised along supply chain organisations using incentives to achieve goal alignment. Methodology The study presents evidence of how members of such organisations achieve goal alignment through the use of incentives by empirically examining two complete supply chain organisations, including final customers, within the UK agri-food industry using a case study methodology. Findings The findings show that contractual goals can be divided into two different categories, shared supply chain organisational goals, and independent goals of each individual participant. In addition to monitoring ability, incentives can also be classified into short term financial and long term social incentives. Product attributes, in particular credence attributes, are also identified as having implications for both goals and incentives. Research limitations The supply chain perspective and case study methodology mean that the research findings cannot be generalised to other supply chains. A further limitation of the research is the use of different methods of data collection at the final customer point. Practical Implications Managers must ensure that appropriate incentives for all departments and individuals are designed to deliver the strategic goals of the supply chain organisation

Loyalty Programmes: Practices, Avenues and Challenges

<div align=justify>Complexity of modern business requires managers to strive for innovative strategies to acquire and retain customers in any product market field. As acquiring new customers is getting costlier day by day, business organizations have offered continuity/loyalty programmes to retain/reward existing customers and maintain relationships. The premise of CRM is that once a customer is locked in, it will be advantageous to both the organization as well as customer to maintain relationships and would be a win-win situation for both. Consumers find it beneficial to join such programmes to earn rewards for staying loyal. Through loyalty programmes, firms can potentially gain more repeat business, get opportunity to cross-sell and obtain rich customer data for future CRM efforts (Yuping Liu, 2007). This paper, exploratory in nature, attempts to provide a conceptual overview of Loyalty in organized retail sector, outlines practices of grocery retail outlets in Ahmedabad, the largest city in the state of Gujarat and the seventh-largest urban agglomeration in India, with a population of 56 lakhs (5.6 million). It also throws light on consumer expectations, perceptions and problems faced through indepth exploration. Based on literature review and environment in India, an emerging economy, it attempts to predict future of such programmes specifically in Indian organised retail sector and discusses managerial challenges of managing loyalty programmes and provides agenda for future research directions.</div>

A New Framework for Evaluating Commodity Promotion Programs: What Can We Learn from Disaggregate Data?

Marketing,