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Why Does the Average Price of Tuna Fall During Lent?

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  • Aviv Nevo
  • Konstantinos Hatzitaskos

Abstract

For many products the average price paid by consumers falls during periods of high demand. We use information from a large supermarket chain to decompose the decrease in the average price into a substitution effect, due to an increase in the share of cheaper products, and a price reduction effect. We find that for almost all the products we study the substitution effect explains a large part of the decrease. We estimate demand for these products and show the price declines are consistent with a change in demand elasticity and the relative demand for different brands. Our findings are less consistent with "loss-leader" models of retail competition.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11572.

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Date of creation: Aug 2005
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Handle: RePEc:nbr:nberwo:11572

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  1. Mark Bils & Peter J. Klenow, 2004. "Some Evidence on the Importance of Sticky Prices," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 112(5), pages 947-985, October.
  2. Peter E. Rossi & Judith A. Chevalier & Anil K. Kashyap, 2002. "Why Don't Prices Rise During Periods of Peak Demand? Evidence from Scanner Data," Yale School of Management Working Papers, Yale School of Management ysm291, Yale School of Management.
  3. Pashigian, B Peter & Bowen, Brian, 1991. "Why Are Products Sold on Sale? Explanations of Pricing Regularities," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 106(4), pages 1015-38, November.
  4. Rotemberg, Julio J & Saloner, Garth, 1986. "A Supergame-Theoretic Model of Price Wars during Booms," American Economic Review, American Economic Association, vol. 76(3), pages 390-407, June.
  5. Bils, Mark, 1989. "Pricing in a Customer Market," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 104(4), pages 699-718, November.
  6. Lal, Rajiv & Matutes, Carmen, 1994. "Retail Pricing and Advertising Strategies," The Journal of Business, University of Chicago Press, vol. 67(3), pages 345-70, July.
  7. Pashigian, B Peter, 1988. "Demand Uncertainty and Sales: A Study of Fashion and Markdown Pricin g," American Economic Review, American Economic Association, vol. 78(5), pages 936-53, December.
  8. Warner, Elizabeth J & Barsky, Robert B, 1995. "The Timing and Magnitude of Retail Store Markdowns: Evidence from Weekends and Holidays," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(2), pages 321-52, May.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Why Does Turkey Get Cheaper Around Thanksgiving?
    by Matthew Yglesias in Moneybox on 2012-11-21 15:07:00
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Cited by:
  1. Tenn, Steven & Yun, John M., 2008. "Biases in demand analysis due to variation in retail distribution," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 984-997, July.
  2. Judith A. Chevalier & Anil K Kashyap, 2011. "Best Prices," NBER Working Papers 16680, National Bureau of Economic Research, Inc.
  3. Genesove, David & Simhon, Avi, 2008. "Seasonality and the Effect of Advertising on Price," CEPR Discussion Papers 6999, C.E.P.R. Discussion Papers.
  4. Guler, Ali Umut & Misra, Kanishka & Vilcassim, Naufel, 2014. "Countercyclical pricing: A consumer heterogeneity explanation," Economics Letters, Elsevier, vol. 122(2), pages 343-347.

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