Table 3 indicates the tiers of high, medium, and low
SLRs. To test H2, a retailer in a lower tier of SLR should
stochastically dominate retailers in a higher SLR tier. We
can examine 65 total pairs of retailers in different tiers for
stochastic dominance. Of the 40 retailer pairs whose CDFs do not intersect, the SLR values correctly predict first-order
stochastic dominance for 32 pairs (80%), in support of H2
(χ2 = 14.40, p < .01). We use the deficit functions (integral
of the CDFs) to test second-order dominance. Of the 49
retailer pairs whose deficit functions do not intersect, the
SLR values correctly predict second-order dominance for
41 pairs (84%), in support of H2 (χ2 = 22.22, p < .01).15 For
retailers exhibiting stochastic dominance over retailers in
the other SLR tiers, the SLR values predict the relative price
dispersion.