DOES MONEY ILLUSION MATTER? THE IMPACT OF EURO ON THE VERTICAL TRANSMISSION OF FOOD PRICE IN GERMANYThomas Glauben, Jens-Peter Loy and Jochen Meyer () No 20104, 2004 Annual meeting, August 1-4, Denver, CO from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) Abstract: In this paper the impact of the introduction of the Euro on the vertical price transmission in German food markets is analyzed. It is hypothesized that the presence of money illusion might have lead to higher real prices as a result of the Euro, and if so it must be accompanied with a higher margin between the respective wholesale and retail price. While generally studies focus on the behavior of average prices, in this study the reactions of individual retailers are investigated. For lettuce and chicken the vertical price relationships between retail and wholesale prices are estimated by an error correction approach, which is extended to test for structural breaks with a flexible time frame. The results indicate no impact of the Euro for most of the retail stores. However, about every fifth grocery store did react to the new currency by generally increasing its mark up significantly. This leads to the conclusion that money illusion might have a significant impact on the real adjustment of prices. Keywords: Marketing (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea04:20104 Access Statistics for this paper More papers in 2004 Annual meeting, August 1-4, Denver, CO from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.