Tyre price dispersion across retail outlets in the UK

Authors: Delgado, Juan¹; Waterson, Michael²

Source: Journal of Industrial Economics, Volume 51, Number 4, December 2003 , pp. 491-509(19)

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Abstract:

We investigate price dispersion in a retail market (car tyres) characterised by outlets each selling a range of products, some of which are manufactured by their owners. Consumers face substantial price dispersion across outlets even for very tightly defined products. We show that this price dispersion has systematic components relating to retailer-manufacturer interactions. One specific result is that chains owned by manufacturers sell other manufacturers' tyres on average nearly 20% more expensively than do independent stores and over 11% more expensively than their own equivalent branded product.

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.0022-1821.2003.00212.x

Affiliations: 1: Directorate General for Competition, European Commission, B-1049 Brussels, Belgium. , Email: Juan.Delgado-Urdanibia@cec.eu.int 2: Department of Economics, University of Warwick, Coventry, CV4 7AL, U.K. , Email: Michael.Waterson@warwick.ac.uk

Publication date: 2003-12-01