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Private Label Price Rigidity during Holiday Periods

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Author Info
Georg Müller (Strategic Pricing Group)
Mark Bergen (University of Minnesota)
Shantanu Dutta (University of Sourthern California)
Daniel Levy (Bar-Ilan University)

Additional information is available for the following registered author(s):

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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Publisher Info
Paper provided by EconWPA in its series Macroeconomics with number 0503006.

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Length: 12 pages
Date of creation: 10 Mar 2005
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Handle: RePEc:wpa:wuwpma:0503006

Note: Type of Document - pdf; pages: 12
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Web page: http://129.3.20.41

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Related research
Keywords: Price Rigidity; Holidays; Private Label; National Brand; Social Consumption;

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Find related papers by JEL classification:
E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
M31 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Marketing

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Dennis W. Carlton, 1987. "The Rigidity of Prices," NBER Working Papers 1813, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Cecchetti, Stephen G., 1986. "The frequency of price adjustment : A study of the newsstand prices of magazines," Journal of Econometrics, Elsevier, vol. 31(3), pages 255-274, April. [Downloadable!] (restricted)
  3. Judith A. Chevalier & Anil K Kashyap & Peter E. Rossi, 2003. "Why Don't Prices Rise During Periods of Peak Demand? Evidence from Scanner Data," American Economic Review, American Economic Association, vol. 93(1), pages 15-37, March. [Downloadable!]
    Other versions:
  4. Basu, Susanto, 1995. "Intermediate Goods and Business Cycles: Implications for Productivity and Welfare," American Economic Review, American Economic Association, vol. 85(3), pages 512-31, June. [Downloadable!] (restricted)
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  5. Daniel Levy & Shantanu Dutta & Mark Bergen, 2004. "Heterogeneity in Price Rigidity: Evidence from a Case Study Using Micro-Level Data," Macroeconomics 0402021, EconWPA. [Downloadable!]
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  6. Otnes, Cele & Lowrey, Tina M & Kim, Young Chan, 1993. " Gift Selection for Easy and Difficult Recipients: A Social Roles Interpretation," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 20(2), pages 229-44, September.
  7. Gordon, Robert J, 1981. "Output Fluctuations and Gradual Price Adjustment," Journal of Economic Literature, American Economic Association, vol. 19(2), pages 493-530, June. [Downloadable!] (restricted)
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  8. 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. [Downloadable!] (restricted)
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  9. Belk, Russell W, 1976. " It's the Thought That Counts: A Signed Digraph Analysis of Gift-Giving," Journal of Consumer Research: An Interdisciplinary Quarterly, University of Chicago Press, vol. 3(3), pages 155-62, December.
  10. Robert Barsky & Mark Bergen & Shantanu Dutta & Daniel Levy, 2001. "What Can the Price Gap between Branded and Private Label Products Tell Us about Markups?," NBER Working Papers 8426, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Caplin, A., 1992. "Individual Inertia and Aggregate Dynamics," Discussion Papers 1992_16, Columbia University, Department of Economics.
  12. 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, vol. 110(2), pages 321-52, May. [Downloadable!] (restricted)
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  14. 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.
    Other versions:
  15. 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. [Downloadable!] (restricted)
  16. 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, 05. [Downloadable!] (restricted)
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  17. 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. [Downloadable!] (restricted)
  18. Levy, Daniel & Müller, Georg & Chen, Allan (Haipeng) & Bergen, Mark & Dutta, Shantanu, 2008. "Holiday Price Rigidity and Cost of Price Adjustment," MPRA Paper 13095, University Library of Munich, Germany. [Downloadable!]
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  19. Dutta, Shantanu & Bergen, Mark & Levy, Daniel, 2002. "Price flexibility in channels of distribution: Evidence from scanner data," Journal of Economic Dynamics and Control, Elsevier, vol. 26(11), pages 1845-1900, September. [Downloadable!] (restricted)
    Other versions:
  20. Slade, M.E., 1996. "Optimal Pricing with Costly Adjustment: Evidence from Retail-Grocery Prices," UBC Departmental Archives 96-02, UBC Department of Economics.
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. 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. [Downloadable!]
  2. Daniel Levy, 2007. "Price rigidity and flexibility: new empirical evidence," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 639-647. [Downloadable!]
    Other versions:
  3. Georg Müller & Mark Bergen & Shantanu Dutta & Daniel Levy, 2006. "Holiday Non-Price Rigidity and Cost of Adjustment," Emory Economics 0612, Department of Economics, Emory University (Atlanta). [Downloadable!]
  4. Daniel Levy & Georg Müller & Haipeng (Allan) Chen & Mark Bergen & Shantanu Dutta, 2008. "Holiday Price Rigidity and Cost of Price Adjustment," Emory Economics 0802, Department of Economics, Emory University (Atlanta). [Downloadable!]
    Other versions:
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