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The present paper extends the existing literature on vertical price transmission and cost pass-through by investigating the impact of product differentiation. We apply distance-measures of product differentiation to a specific product market (yoghurt) within one country (Germany). Results from a panel-error-correction model for 30 products sold in 432 stores over a period of 312 weeks suggest that product differentiation explains a significant share of differences in cost pass-through rates: more differentiated products command higher prices and are characterised by lower equilibrium cost pass-through rates as well as more sluggish price adjustment.

We analyse the technical efficiency of dairy farms in Schleswig‐Holstein that took part in the European Farm Credit Programme over the period 1987 to 1994. One goal of this programme is to increase the productivity of farms. We test whether participants show higher technical efficiency. We utilise a stochastic frontier model that allows for heteroscedasticity and estimation of determinants of technical inefficiency. Statistical tests indicate dominance of this model over alternative specifications. On average, we observe a high level of technical efficiency between 1987–94, but participation in the programme has rather led to a slight decrease. Thus, the programme seems to have failed to increase the competitiveness of farms.

In food retailing a high degree of static price dispersion between and within stores and between brands has been documented, but at the brand and/or retail outlet level the dynamic behaviour of prices, as well as its causes, have not been analysed in the European food market context. In this paper we estimate the dynamic pricing behaviour of brands at various retail outlets to identify the role of private (low-price brands) and national (high-price brands) labels to explain the dispersion of retail price dynamics. The results indicate significant asymmetries in cost pass-through processes, which vary between brands and outlets. In particular, private labels (low-price brands) adjust prices faster than national labels (high-price brands). Moreover, cost pass-through is slightly more (positive) asymmetrical for private labels than for high-price national brands.

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