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Price rigidity in Europe and the US: A comparative analysis using scanner data

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  • B. VERHELST

    ()

  • D. VAN DEN POEL

    ()

Abstract

This paper uses scanner data from two large retailers to offer new insights into the extent of price rigidity in Europe and the US. Recent empirical research in this field has made extensive use of monthly data to study price stickiness and to control for the impact of temporary sales. We show that the use of monthly data is potentially highly misleading. We employ scanner data in (bi)weekly frequency and highlight the importance of high frequency data in studying price rigidity. Regular prices show roughly the same degree of flexibility in Europe and the US, in line with recent empirical research, when we study monthly price series derived from our high frequency scanner data. This finding collapses, however, when the original scanner datasets in higher base frequency are examined. Regular prices are then far more flexible in the US than in Europe. This result is robust to the type of sales filter that we apply and the statistic used to capture price rigidity.

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Bibliographic Info

Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 10/684.

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Length: 32 pages
Date of creation: Nov 2010
Date of revision:
Handle: RePEc:rug:rugwps:10/684

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Keywords: price setting; scanner data; frequency of price change; sales filtering;

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Citations

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Cited by:
  1. B. Verhelst & D. Van Den Poel, 2012. "Implicit Contracts and Price Stickiness: Evidence from Customer-Level Scanner Data," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/776, Ghent University, Faculty of Economics and Business Administration.
  2. B. Verhelst & D. Van Den Poel, 2012. "Deep Habits in Consumption: A Spatial Panel Analysis Using Scanner Data," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/823, Ghent University, Faculty of Economics and Business Administration.

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