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Multiproduct retailing and consumer shopping behavior: The role of shopping costs

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Date
2020-01
Indexation documentaire
Economie industrielle
Subject
Supermarket competition; market power; multistop shopping; shopping costs; product delisting; loss-leader pricing
Code JEL
L.L1.L13; L.L8.L81; D.D1.D12
Nom de la revue
International Journal of Industrial Organization
Volume
68
Date de publication
01-2020
Nom de l'éditeur
Elsevier
DOI
http://dx.doi.org/10.1016/j.ijindorg.2019.102560
URI
https://basepub.dauphine.fr/handle/123456789/20470
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Auteur
Florez-Acosta, Jorge
44062 Universidad del Rosario
Herrera-Araujo, Daniel
status unknown
Type
Article accepté pour publication ou publié
Résumé en anglais
We empirically examine the role of shopping costs in consumer shopping behavior in a context of competing differentiated supermarkets that supply similar product lines. We develop and estimate a model of demand in which consumers can purchase multiple products from multiple stores in the same week, and incur transaction costs of dealing with supermarkets. We show that a similar model without shopping costs predicts a larger proportion of multistop shoppers and overestimates own-price elasticities and product markups. Further, we use our model along with a model of competition between supermarkets to study two practices that are commonly used by supermarkets: product delisting and loss-leader pricing. We show that the presence of shopping costs makes product delisting less profitable whereas it makes loss-leader pricing more profitable compared to a context in which consumers do not incur shopping costs.

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