A rationale for repealing the 1987 Groceries Order

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Title: A rationale for repealing the 1987 Groceries Order
Authors: Whelan, Ciara
Walsh, Patrick P.
Permanent link: http://hdl.handle.net/10197/127
Date: 1999
Abstract: A ban on pricing below cost was implemented under the 1987 Groceries Order based on the premise that loss leading used in multi-product retail pricing distorts competition and exploits consumers in the short run, while driving a more concentrated structure and reducing welfare in the long run. Loss leading is examined for multi-product retailers selling in imperfectly competitive market niches with imperfect consumer information. We develop a theoretical argument in a simple two-stage framework that illustrates how loss leading on a subset of products is an equilibrium outcome of price competition that leaves overall welfare equal to that observed under laissez faire.
Type of material: Journal Article
Publisher: Economic and Social Research Institute (ESRI)
Copyright (published version): ESRI, 1999
Subject LCSH: Grocery trade--Law and legislation
Price regulation--Ireland
Loss leaders--Ireland
Language: en
Status of Item: Peer reviewed
Appears in Collections:Politics and International Relations Research Collection
Geary Institute Research Collection
Economics Research Collection

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