This paper aims to assess\u00a0the effects of geographical competition and demand on proprietor-run grocery stores\u2019 pricing in Uusimaa, Finland\u2019s most populated province.<\/p>\n
Abstract<\/strong>: Due to the duopolistic characteristics of the Finnish grocery retail trade proprietor-run stores operate as adaptive price setters on the market. This paper examined the effects of geographical competition and demand on proprietor-run grocery stores\u2019 pricing in Finland\u2019s most populated province \u2013Uusimaa. The assumption is that the price premium of a proprietor-operated store compared to the nearest co-operative competitor reflects the characteristics of competition and demand. Hypotheses on the influence of competition environment and demand environment on proprietor-operated store\u2019s price premium were constructed based on literature review. The respective prices of a twelve-item shopping basket were collected for the study by on-site observations in all of the supermarkets and hypermarkets in Uusimaa. A linear multiple regression analysis showed a statistical significance in explaining the price premium by average home floor space in a store\u2019s catchment area and store format compared to the closest co-operative competitor. A semiparametric geographically weighted regression slightly improves the linear model.<\/p>\n Keywords:<\/strong> grocery trade, Uusimaa, price premium, geographically weighted regression<\/p>\n Author: <\/strong>Kari Halme, Laurea University of Applied Sciences, Ratatie 22, 01300 Vantaa, Finland, kari.halme (at) laurea.fi<\/a><\/p>\n