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Non-price rigidity and cost of adjustment

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Author Info

  • Georg Müller

    (Monitor Group, Chicago, IL, USA)

  • Mark Bergen

    (University of Minnesota, Minneapolis, MN, USA)

  • Shantanu Dutta

    (University of Southern California, Los Angeles, CA, USA)

  • Daniel Levy

    (Bar-Ilan University, Ramat-Gan, Israel)

Abstract

There has been increasing interest in understanding how firms undertake non-price adjustment activities, especially in situations where prices may be rigid despite changes in market conditions. Using scanner price data for over 4500 different food products from a large US supermarket chain, we document periods of rigidity in product additions and deletions: new products are less likely to be introduced, and existing products are less likely to be discontinued during holiday periods than throughout the rest of the year. We argue that this is due to higher costs of undertaking these kinds of product assortment activities during holiday periods. We discuss how this relates to the exiting literature on non-price adjustment and price rigidity. Copyright © 2007 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1379
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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: 817-832

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Handle: RePEc:wly:mgtdec:v:28:y:2007:i:7:p:817-832

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

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References

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Cited by:
  1. Daniel Levy, 2007. "Price rigidity and flexibility: new empirical evidence," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 639-647.

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