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Private Label Price Rigidity during Holiday Periods

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  • Georg Mueller
  • Mark Bergen
  • Shantanu Dutta
  • Daniel Levy

Abstract

Using weekly retail transaction scanner price data from a large U.S. supermarket chain, we find significantly higher retail price rigidity for private label products than for nationally branded products during the Christmas and Thanksgiving holiday periods relative to the rest of the year. The finding cannot be explained by changes in holiday period promotional practices because we find that private label promotions appear to diminish at least as much as national brands. The increased rigidity of private label products relative to national brands is only partially accounted for by increased rigidity of wholesale prices. After ruling out other potential explanations, we suggest that the higher private label price rigidity might be due to the increased emphasis on social consumption during holiday periods, raising the customers' value of nationally branded products relative to the private labels.

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Paper provided by Department of Economics, Emory University (Atlanta) in its series Emory Economics with number 0512.

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Date of creation: Mar 2005
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Handle: RePEc:emo:wp2003:0512

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  1. Daniel Levy & Shantanu Dutta & Mark Bergen, 2002. "Heterogeneity in Price Rigidity: Evidence from a Case Study Using Micro-Level Data," Working Papers 2002-09, Department of Economics, Bar-Ilan University.
  2. Ball, Laurence & Romer, David, 2003. " Inflation and the Informativeness of Prices," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(2), pages 177-96, April.
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  10. Robert Barsky & Mark Bergen & Shantanu Dutta & Daniel Levy, 2002. "What Can the Price Gap between Branded and Private Label Products Tell Us about Markups?," Working Papers 2002-02, Department of Economics, Bar-Ilan University.
  11. Susanto Basu, 1994. "Intermediate Goods and Business Cycles: Implications for Productivity and Welfare," NBER Working Papers 4817, National Bureau of Economic Research, Inc.
  12. Levy, Daniel & Müller, Georg & Chen, Haipeng (Allan) & Bergen, Mark & Dutta, Shantanu, 2008. "Holiday Price Rigidity and Cost of Price Adjustment," MPRA Paper 13095, University Library of Munich, Germany.
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  14. Robert C. Feenstra & Matthew D. Shapiro, 2003. "Scanner Data and Price Indexes," NBER Books, National Bureau of Economic Research, Inc, number feen03-1, May.
  15. Caplin, Andrew & Leahy, John, 1991. "State-Dependent Pricing and the Dynamics of Money and Output," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 683-708, August.
  16. Dennis W. Carlton, 1986. "The Rigidity of Prices," NBER Working Papers 1813, National Bureau of Economic Research, Inc.
  17. Pashigian, B Peter & Bowen, Brian, 1991. "Why Are Products Sold on Sale? Explanations of Pricing Regularities," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1015-38, November.
  18. Mark J. Zbaracki & Mark Ritson & Daniel Levy & Shantanu Dutta & Mark Bergen, 2004. "Managerial and Customer Costs of Price Adjustment: Direct Evidence from Industrial Markets," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 514-533, May.
  19. Julio J. Rotemberg, 2002. "Customer Anger at Price Increases, Time Variation in the Frequency of Price Changes and Monetary Policy," NBER Working Papers 9320, National Bureau of Economic Research, Inc.
  20. Otnes, Cele & Lowrey, Tina M & Kim, Young Chan, 1993. " Gift Selection for Easy and Difficult Recipients: A Social Roles Interpretation," Journal of Consumer Research, University of Chicago Press, vol. 20(2), pages 229-44, September.
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Cited by:
  1. Georg Muller & Mark Bergen & Shantanu Dutta & Daniel Levy, 2006. "Holiday Non-Price Rigidity and Cost of Adjustment," Working Papers 2006-4, Department of Economics, Bar-Ilan University.
  2. Daniel Levy, 2006. "Price Rigidity and Flexibility: New Empirical Evidence," Emory Economics 0611, Department of Economics, Emory University (Atlanta).
  3. Levy, Daniel & Müller, Georg & Chen, Haipeng (Allan) & Bergen, Mark & Dutta, Shantanu, 2008. "Holiday Price Rigidity and Cost of Price Adjustment," MPRA Paper 13095, University Library of Munich, Germany.
  4. Georg Müller & Mark Bergen & Shantanu Dutta & Daniel Levy, 2007. "Non-price rigidity and cost of adjustment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 817-832.

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