Multiproduct retailing and consumer shopping behavior: The role of shopping costs
Florez-Acosta, Jorge; Herrera-Araujo, Daniel (2020), Multiproduct retailing and consumer shopping behavior: The role of shopping costs, International Journal of Industrial Organization, 68. 10.1016/j.ijindorg.2019.102560
TypeArticle accepté pour publication ou publié
Journal nameInternational Journal of Industrial Organization
MetadataShow full item record
Universidad del Rosario
Laboratoire d'Economie de Dauphine [LEDa]
Institut de Recherche pour le Développement (IRD)
Abstract (EN)We empirically examine the role of shopping costs in consumer shopping behavior in a context of competing differentiated supermarkets that supply similar product lines. We develop and estimate a model of demand in which consumers can purchase multiple products from multiple stores in the same week, and incur transaction costs of dealing with supermarkets. We show that a similar model without shopping costs predicts a larger proportion of multistop shoppers and overestimates own-price elasticities and product markups. Further, we use our model along with a model of competition between supermarkets to study two practices that are commonly used by supermarkets: product delisting and loss-leader pricing. We show that the presence of shopping costs makes product delisting less profitable whereas it makes loss-leader pricing more profitable compared to a context in which consumers do not incur shopping costs.
Subjects / KeywordsSupermarket competition; market power; multistop shopping; shopping costs; product delisting; loss-leader pricing
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