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Asymmetric price adjustment: evidence from weekly product-level scanner price data

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  • Georg Müller

    (Monitor Group, Chicago IL, USA)

  • Sourav Ray

    (McMaster University, Hamilton ON, Canada)

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    Abstract

    We investigate asymmetric price responses by considering a unique, highly disaggregate retailer- and product-level time series at a major supermarket chain. We find asymmetry exists, but is limited in scope and there is no evidence of a pervasive chain wide asymmetric pricing strategy. To explain product level variation, we borrow from both economic and marketing perspectives to suggest menu costs, operational efficiency, competition, and consumer perceptions as important factors. The evidence suggests an efficiency-based rationale for asymmetry. This study complements that of Peltzman (2000. J. Polit. Econ. 108 (3): 466-502.) who found no systematic asymmetry in a study of the same data considered at a more aggregate level. Copyright © 2007 John Wiley & Sons, Ltd.

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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

    Volume (Year): 28 (2007)
    Issue (Month): 7 ()
    Pages: 723-736

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    Handle: RePEc:wly:mgtdec:v:28:y:2007:i:7:p:723-736

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    Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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    Cited by:
    1. Loupias, C. & Sevestre, P., 2010. "Costs, demand, and producer price changes," Working papers, Banque de France 273, Banque de France.
    2. Vespignani, Joaquin L., 2012. "Modelling asymmetric consumer demand response: Evidence from scanner data," MPRA Paper 55601, University Library of Munich, Germany.
    3. Daniel Levy & Haipeng (Allan) Chen & Sourav Ray & Mark Bergen, 2007. "Asymmetric Price Adjustment in the Small," Kiel Working Papers 1356, Kiel Institute for the World Economy.
    4. Diego Escobari, 2013. "Asymmetric Price Adjustments in Airlines," Managerial and Decision Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 34(2), pages 74-85, 03.
    5. Levy, Daniel, 2007. "Price Rigidity and Flexibility: New Empirical Evidence," MPRA Paper 2762, University Library of Munich, Germany.

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