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The short- and long-run effects of the vector grocery store consumer price information program

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  • Boynton, Robert D.
  • Perloff, Jeffrey M.

Abstract

This paper uses a theory of the way information affects average prices, the price distribution across stores, and the degree of concentration within the retail grocery industry to estimate the effects of Vector Enterprise's consumer information program. Since 1972, Vector has ShOl1n each grocery chain's prices on cable television in many cities. By providing consumers with a relatively easy and inexpensive method of comparing prices across grocery chains, Vector's information program has increased the competitiveness of the retail grocery industry in those cities. The first section of this paper presents a summary of the theoretical model used in this study. The problems of using indexes to provide information about grocery prices are described in the second section. The third section summarizes the major results of previous empirical studies. In the fourth section, Vector's information program is described. The effects of the program on average prices are examined in the fifth section. The sixth section analyzes the impact of the program on the degree of concentration within the retail grocery industry·. The effects of the program on the distribution of prices across stores are examined in the seventh section. The last section presents conclusions and suggestions for further research.

Suggested Citation

  • Boynton, Robert D. & Perloff, Jeffrey M., 1982. "The short- and long-run effects of the vector grocery store consumer price information program," CUDARE Working Papers 47007, University of California, Berkeley, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:ucbecw:47007
    DOI: 10.22004/ag.econ.47007
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    References listed on IDEAS

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    1. Stigler, George J., 2011. "Economics of Information," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 5, pages 35-49.
    2. D. Grant Devine & Bruce W. Marion, 1979. "The Influence of Consumer Price Information on Retail Pricing and Consumer Behavior," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(2), pages 228-237.
    3. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
    4. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    5. Grant Devine & Bruce Marion, 1979. "The influence of consumer price information on retail pricing and consumer behavior," Framed Field Experiments 00138, The Field Experiments Website.
    6. Michael, Robert T, 1979. "Variation across Households in the Rate of Inflation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 11(1), pages 32-46, February.
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