Product Differentiation and Cost Pass‐Through

Loy, Jens‐Peter; Weiss, C.

doi:10.1111/1477-9552.12320

Cited by 12 publications

(44 citation statements)

References 55 publications

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“…The city block distance is closer to the Gower coefficient in terms of its mean and maximum value. The Gower coefficient and the distance measure based on Loy and Weiss (2019) are almost identical. Correlations between the product differentiation measures are high, in particular the Gower and Loy and Weiss (2019) coefficients are very close.…”

Section: Measures Of Product Differentiationmentioning

confidence: 91%

“…Loy and Weiss (2019) first create separate distance matrices for each product attribute. They measure the similarity between products by employing the inverse Euclidean distance as in Rojas and Peterson (2008) and then reverse it to result in a measure of product differentiation.…”

Section: Measures Of Product Differentiationmentioning

confidence: 99%

“…Loy and Weiss (2019) use a second procedure to aggregate mixed variables by transforming all continuous attributes into binary variables. As this procedure would eliminate information in our data and may generate some arbitrary differentiations (Krzanowski 1993), we choose an alternative second measure following Milligan and Cooper (1988).…”

Section: Measures Of Product Differentiationmentioning

confidence: 99%

“…Loy and Weiss (2019) were the first to empirically estimate the impact of a product differentiation measure in a reduced‐form cost pass‐through model for a European retail market. They show that German yoghurt prices depend on the level of differentiation in product characteristics.…”

Section: Introductionmentioning

confidence: 99%

“…In particular, they find that industry‐wide cost pass‐through changes for more differentiated products. We follow the study by Loy and Weiss (2019) in estimating different measures of product differentiation and their impact on industry‐wide cost pass‐through rates.…”

Section: Introductionmentioning

confidence: 99%

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Product differentiation and cost pass‐through: industry‐wide versus firm‐specific cost shocks

Bittmann¹,

Loy²,

Anders

2020

Aus J Agri & Res Econ

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This paper investigates the impact of product differentiation on firm-specific and industry-wide cost pass-through in grocery retailing. We use attribute distance measures to model product differentiation based on a unique set of retail scanner data for ready-to-eat soup products in the Canadian market. Results from a panel error correction model suggest that product differentiation explains a significant share of the variation in the rate of cost pass-through across products. More differentiated products are associated with lower rates of cost pass-through of industry-wide and higher pass-through of firm-specific costs shocks. The findings validate an oligopolistic model of product differentiation, where firms use differentiation as a non-price competitive factor in strategic pricing decisions.

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Section: Measures Of Product Differentiationmentioning

confidence: 91%

Section: Measures Of Product Differentiationmentioning

confidence: 99%

Section: Measures Of Product Differentiationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Product differentiation and cost pass‐through: industry‐wide versus firm‐specific cost shocks

Bittmann¹,

Loy²,

Anders

2020

Aus J Agri & Res Econ

Self Cite

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Price rigidity, wholesale price passthrough, and quality‐tiered private labels

Anders

Volpe

Bittmann³

2023

Manage Decis Econ

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Quality‐tiered private labels have become a main strategy for grocery retailers. However, impacts of private label development on wholesale prices and their effects on retail price rigidity remain unanswered as appropriate wholesale price data remain scarce. This paper fills this research gap by analyzing retail‐pricing behavior and wholesale passthrough for categories with quality‐tier differentiated private labels. We find the speed of wholesale passthrough to differ across categories, quality tier, and direction of adjustment. Overall, we find wholesale prices to play a secondary role to price promotions in explaining price rigidity across grocery categories with quality‐tiered private labels.

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