Price transmission at the micro-level: what accounts for the heterogeneity?

Authors: Lloyd, T., Lan, H., McCorriston, S. and Morgan. C.W.

Start date: 29 September 2017

We use high-frequency scanner data to estimate product-specific price transmission elasticities across product types, between national brands and private labels and across retail chains in the UK. The results provide new insights into the determinants of price transmission including the role of vertical control in the retail chain, the elasticity of retail mark-ups and retailer market power. Using data on 106 orange juice products over 130 weeks for 7 UK retail chains, we highlight significant variation in price transmission by chain and that the characteristics of pricing behaviour and differences in vertical control across are important determinants of price transmission.

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