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What are the drivers of retailer pricing tactics over time? Based on multivariate time-series analysis of two rich data sets, we quantify the relative importance of competitive retailer prices, pricing history, brand demand, wholesale prices, and retailer category-management considerations as drivers of retail prices. Interestingly, competitive retailer prices account for less than 10% of the over-time variation in retail prices. Instead, pricing history, wholesale price, and brand demand are the main drivers of retail-price variation over time. Moreover, the influence of these price drivers on retailer pricing tactics is linked to retailer category margin. We find that demand-based pricing and category-management considerations are associated with higher retailer margins. In contrast, dependence on pricing history and pricing based on store traffic considerations imply lower retailer margins.

Online prices are increasingly used for measurement and research applications, yet little is known about their relation to prices collected offline, where most retail transactions take place. I conduct the first large-scale comparison of prices simultaneously collected from the websites and physical stores of 56 large multi-channel retailers in 10 countries. I find that price levels are identical about 72 percent of the time. Price changes are not synchronized but have similar frequencies and average sizes. These results have implications for national statistical offices, researchers using online data, and anyone interested in the effect of the Internet on retail prices.

The authors develop a conceptual framework of the factors that motivate a retailer's decision to rely on demand conditions and past prices in setting current and future prices. Specifically, they examine the circumstances under which retailers choose demand-based pricing versus past-price dependence for different brands and categories. Given scarce resources and costs of price adjustments, demand-based pricing is more likely when the customer-driven and firm-driven costs of adjusting pricing patterns are low or when the benefits of such adjustments are high. First, the customer-driven benefits of demand-based pricing are expected to be greater in categories with higher penetration and for brands with higher market share and higher demand sensitivity to price. Second, the firm-driven benefits are greater for categories with higher private-label share. Finally, the customer-driven costs are greater for expensive categories, whereas the firm-driven costs are greater for categories with many stockkeeping units. The empirical findings support the conceptual framework, implying that customer-driven and firm-driven benefits are the main stimulants in the retailer's choice of demand-based pricing. In contrast, customer-driven and firm-driven costs significantly hinder retailer implementation of demand-based pricing. These insights enable retailers to identify problem areas and opportunities to improve the allocation of scarce pricing resources. The results also contribute to the ongoing debate in economics and marketing on the rationality of observed past-price dependence. Whereas previous research points to the negative impact on gross margins of this practice, the authors find that retailers weigh the costs and benefits of demand-based pricing rather than adhere to past-pricing patterns.

While the Internet has provided a new means for retailers to reach consumers, it has fundamentally changed the dynamic of competition in the retail service supply chain. The mix of offline and online channels adds a new dimension of competition, and one central issue of this competition is the pricing strategy between the two channels. How to set prices for both online and offline channels? What is the impact of the supply chain power structure on pricing decisions and the performance? This research aims to address these questions by focusing on a retail service supply chain with an online-to-offline (O2O) mixed dual-channel. From the Supplier-Stackelberg, Retailer-Stackelberg, and Nash game theoretical perspectives, we obtain the optimal prices and maximum profits for both the retailer and supplier under different power structures. The analysis result provides important managerial implications, which will be beneficial to retailers to develop proper pricing strategies.

This paper reviews the experience of 1990, the first year of Poland's program of stabilization and reform. The background is described, including previous reform efforts and the crisis of the late 1980s. Then the various elements of the program are discussed, including fiscal adjustment, wage controls, the possibility of an initial liquidity overhang, the exchange rate anchor, and structural reforms. The initial results of the program are assessed, and alternative explanation of the decline in output are considered.

We study the impact of large exchange rate devaluations on the cost of living at different points on the income distribution. Poor households spend relatively more on tradeable product categories and consume lower-priced varieties within categories. Changes in the relative price of tradeables and of lower-priced varieties affect the cost of living of low-income relative to high-income households. We quantify these effects following the 1994 Mexican devaluation and show that they can have large distributional consequences. Two years post-devaluation, the cost of living for the bottom income decile rose 1.48 to 1.62 times more than for the top income decile.

This paper studies the incentive for vertical information sharing in competing supply chains with production technologies that exhibit diseconomies of scale. We consider a model of two supply chains each consisting of one manufacturer selling to one retailer, with the retailers engaging in Cournot or Bertrand competition. For Cournot retail competition, we show that information sharing benefits a supply chain when (1) the production diseconomy is large and (2) either competition is less intense or at least one retailer's information is less accurate. A supply chain may become worse off when making its information more accurate or production diseconomy smaller, if such an improvement induces the firms in the rival supply chain to cease sharing information. For Bertrand retail competition, we show that information sharing benefits a supply chain when (1) the production diseconomy is large and (2) either competition is less intense or information is more accurate. Under Bertrand competition a manufacturer may be worse off by receiving information, which is never the case under Cournot competition. Information sharing in one supply chain triggers a competitive reaction from the other supply chain and this reaction is damaging to the first supply chain under Cournot competition but may be beneficial under Bertrand competition. This paper was accepted by Martin Lariviere, operations management.

I provide an analysis of vertical relations in markets with imperfect competition at both layers of the supply chain and where exchange is intermediated either with wholesale prices or revenue-sharing contracts. Revenue-sharing is extremely attractive to firms that are able to set the revenue shares but often makes the firms that set retail prices worse off. This is so whether revenue-sharing lowers or raises industry profits. These results are strengthened when a market moves from \"the wholesale model\" of sales to \"the agency model\" of sales, which results in retailers setting revenue shares and suppliers setting retail prices. I also show that retail price-parity restrictions raise industry prices. These results provide a potential explanation for why many online retailers have adopted the agency model and retail price-parity clauses.

By analyzing various alternative mixed channel structures composed of a monopoly manufacturer and online and offline outlets, we investigate how the specific channel structure and varying market conditions moderate the impact of Internet channel entry on the channel members and consumers. As an extension of Balasubramanian's model [Balasubramanian, S. 1998. Mail versus mall: A strategic analysis of competition between direct marketers and conventional retailers. Marketing Sci. 17 (3) 181-195], our game-theoretic model captures the fundamental difference between two different channel types and consumer heterogeneity in preference for the Internet channel use. The equilibrium solutions indicate that Internet channel entry does not always lead to lower retail prices and enhanced consumer welfare. We also find that an independent retailer might become worse off after adding its own Internet outlet under certain market conditions. We find that the impact of the Internet channel introduction substantially varies across channel structures and market environments. We explain these varied results by proposing a framework of five key strategic forces that shape the overall impact of the Internet channel introduction.

E-book sales surged after Amazon introduced the Kindle e-reader at the end of 2007 and accounted for about one quarter of all trade book sales by the end of 2013. Amazon's aggressive (low) pricing of e-books led to allegations that e-books were bankrupting brick and mortar book booksellers. Amazon's commanding position as a bookseller also raises concerns about monopoly power, and publishers are concerned about Amazon's power to displace them in the book value chain. I find little evidence that e-books are primarily responsible for the decline of independent booksellers. I also conclude that entry barriers are not sufficient to allow Amazon to set monopoly prices. Publishers are at risk from Amazon's monopsony (buyer) power and so sought “agency” pricing in an effort to raise the price of ebooks, promote retail competition, and reduce Amazon's influence as an e-retailer. (In the agency pricing model, the publisher specifies the retail price with a commission for the retailer. In a traditional, “wholesale” pricing model, publishers sell a book to retailers at a wholesale price and retailers set the retail price.) Although agency pricing was challenged by the Department of Justice, it may yet prevail in some form as an equilibrium pricing model for e-book sales.