Brand-supermarket demand for breakfast cereals and retail competition

Benaissa Chidmi, Rigoberto A. Lopez

Research output: Contribution to journalArticlepeer-review

16 Scopus citations

Abstract

The Berry, Levinsohn, and Pakes (1995) market equilibrium model is extended to the supermarket chain level to examine consumer choices and retail competition for thirty-seven brands of breakfast cereals in Boston. Estimated taste parameters for product characteristics vary significantly across consumers. Although consumers are price-sensitive with respect to their chosen cereals, they exhibit strong brand and supermarket loyalty. Retail markups increase and marginal costs decrease with grocery market shares, attesting to oligopoly power with efficiencies. Markups decrease with the own-price elasticity of demand, with Corn Flakes having the highest markups. A detailed picture of consumer response and supermarket competition is provided.

Original languageEnglish
Pages (from-to)324-337
Number of pages14
JournalAmerican Journal of Agricultural Economics
Volume89
Issue number2
DOIs
StatePublished - May 2007

Keywords

  • Breakfast cereals
  • Demand
  • Retail competition
  • Supermarket

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