Product-line length, or variety, is a key competitive tool used by retailers to differentiate themselves from rivals. Theoretical models of price and variety competition suggest that both store and product heterogeneity are key determinants of price and variety strategies, but none test this hypothesis in a rigorous way. This study provides the first empirical evidence on supermarket retailers’ combined price and variety strategies using a nested CES modeling framework. Unlike other discrete-choice models of product differentiation, the NCES model is sufficiently general to admit both corner and interior solutions in both store and product choice. The model is estimated using store-level scanner data for all grocery chains in a major West Coast market and finds that retailers do indeed use both price and product-line strategies to compete for market share, but tend to follow moderately cooperative pricing strategies and price and more cooperative strategies in variety.

No American metropolis has been more loved or hated than Los Angeles. Witness how for 25 years Phoenix’s mantra has been “We are not L.A.” Unfortunately, that mantra has not produced an agenda for making Phoenix a better place. “Are nots” and “don’t wants” never turn into action, even when there is agreement on what that action should be. “We Are L.A.?,” the second issue in Morrison Institute’s policy briefing series Forum 411: Engaging Arizona’s Leaders, looks at how smog, congestion, and density have defined the two places. The briefing provides an overview of the two metro regions and how they compare on several important measures. The report not only challenges the myth that Phoenix has become too much “like L.A.,” but also proposes a new way of thinking about what it means to be Phoenix. “We Are L.A,?” argues that metro Phoenix must come up its own homegrown identity more powerful than simply “not L.A.”