Energy Shock and Price Adjustment: National Brands vs. Private Labels of Retail Milk Products Report as inadecuate




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This paper examines how retailers adjust prices of national brands and private labels when they are exposed to energy shocks. Empirical results from 12 U.S. fluid milk markets provide insights into the magnitude and timing of price adjustment. Asymmetric energy pass-through is validated. The pass-through rate is found to be consistently higher for national brands compared to private labels, indicating that the private labels are more insulated to energy shocks. Further results show that the speed of energy price pass-through is faster for national brands compared to private labels when the energy price increases. However, the speed is similar for the two when the energy price decrease. Overall, this paper shows that when there is a positive energy shock, the retailers adjust prices of national brands first, on average, but they are almost indifferent with the order of adjustment when there is a decrease in energy prices.

Keywords: Energy Shock ; National Brand ; Private Label ; Price Adjustment

Subject(s): Demand and Price Analysis

Industrial Organization

Issue Date: 2016-05

Publication Type: Conference Paper/ Presentation

PURL Identifier: http://purl.umn.edu/235613

Total Pages: 19

JEL Codes: D4; L1; Q1; Q4

Record appears in: Agricultural and Applied Economics Association (AAEA) > 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts





Author: Li, Xun ; Wang, Rui ; Lopez, Rigoberto A.

Source: http://ageconsearch.umn.edu/record/235613?ln=en







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