IDEAS home Printed from https://ideas.repec.org/a/bla/jindec/v63y2015i2p339-370.html
   My bibliography  Save this article

Change at the Checkout: Tracing the Impact of a Process Innovation

Author

Listed:
  • Emek Basker

Abstract

type="main"> Barcode scanners, introduced in the early 1970's, were a foundational process innovation in the grocery supply chain. By 1984 scanners had been installed in 10% of food stores in the U.S. Fixed-effect analysis of city-level price data shows that scanners reduced prices of groceries by at least 1.4% in their first decade. The results are consistent with prior estimates of labor saving by scanners. Early adopters and adopters in states that imposed fewer restrictions on complementary process innovations contributed disproportionately to the price decreases.

Suggested Citation

  • Emek Basker, 2015. "Change at the Checkout: Tracing the Impact of a Process Innovation," Journal of Industrial Economics, Wiley Blackwell, vol. 63(2), pages 339-370, June.
  • Handle: RePEc:bla:jindec:v:63:y:2015:i:2:p:339-370
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/joie.12073
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Saul Lach, 2007. "Immigration and Prices," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 548-587, August.
    2. Nicholas Bloom & Luis Garicano & Raffaella Sadun & John Van Reenen, 2014. "The Distinct Effects of Information Technology and Communication Technology on Firm Organization," Management Science, INFORMS, vol. 60(12), pages 2859-2885, December.
    3. Igal Hendel & Aviv Nevo, 2006. "Measuring the Implications of Sales and Consumer Inventory Behavior," Econometrica, Econometric Society, vol. 74(6), pages 1637-1673, November.
    4. David Lagakos, 2009. "Superstores or mom and pops? Technolgy adoption and productivity differences in retail trade," Staff Report 428, Federal Reserve Bank of Minneapolis.
    5. Igal Hendel & Aviv Nevo, 2006. "Sales and consumer inventory," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 543-561, September.
    6. Leonard I. Nakamura, 1999. "The measurement of retail output and the retail revolution," Canadian Journal of Economics, Canadian Economics Association, vol. 32(2), pages 408-425, April.
    7. Levy, Daniel & Bergen, Mark & Dutta, Shantanu & Venable, Robert, 1997. "The Magnitude of Menu Costs: Direct Evidence from Large U.S. Supermarket Chains," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 791-824.
    8. Patricia Cortes, 2008. "The Effect of Low-Skilled Immigration on U.S. Prices: Evidence from CPI Data," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 381-422, June.
    9. Emek Basker & Michael Noel, 2009. "The Evolving Food Chain: Competitive Effects of Wal‐Mart's Entry into the Supermarket Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 977-1009, December.
    10. Emek Basker, 2012. "Raising the Barcode Scanner: Technology and Productivity in the Retail Sector," American Economic Journal: Applied Economics, American Economic Association, vol. 4(3), pages 1-27, July.
    11. Holmes, Thomas J, 2001. "Bar Codes Lead to Frequent Deliveries and Superstores," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 708-725, Winter.
    12. Michael B. Ward & Jay P. Shimshack & Jeffrey M. Perloff & J. Michael Harris, 2002. "Effects of the Private-Label Invasion in Food Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 961-973.
    13. Lucia Foster & John Haltiwanger & C.J. Krizan, 2002. "The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade," NBER Working Papers 9120, National Bureau of Economic Research, Inc.
    14. Frankel, David M. & Gould, Eric D., 2001. "The Retail Price of Inequality," Journal of Urban Economics, Elsevier, vol. 49(2), pages 219-239, March.
    15. Emek Basker & Shawn Klimek & Pham Hoang Van, 2008. "Supersize It: The Growth of Retail Chains and the Rise of the "Big Box" Retail Format," Working Papers 0809, Department of Economics, University of Missouri, revised 30 Sep 2010.
    16. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    17. Mark Bergen & Daniel Levy & Sourav Ray & Paul H. Rubin & Benjamin Zeliger, 2008. "When Little Things Mean a Lot: On the Inefficiency of Item-Pricing Laws," Journal of Law and Economics, University of Chicago Press, vol. 51(2), pages 209-250, May.
    18. Levin, Sharon G & Levin, Stanford L & Meisel, John B, 1992. "Market Structure, Uncertainty, and Intrafirm Diffusion: The Case of Optical Scanners in Grocery Stores," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 345-350, May.
    19. Sinan Aral & Erik Brynjolfsson & Lynn Wu, 2012. "Three-Way Complementarities: Performance Pay, Human Resource Analytics, and Information Technology," Management Science, INFORMS, vol. 58(5), pages 913-931, May.
    20. Das Nilotpal & Falaris Evangelos M & Mulligan James G, 2009. "Vintage Effects and the Diffusion of Time-Saving Technological Innovations," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-37, June.
    21. Jerry Hausman & Ephraim Leibtag, 2007. "Consumer benefits from increased competition in shopping outlets: Measuring the effect of Wal-Mart," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1157-1177.
    22. Mark Doms & Ron Jarmin & Shawn Klimek, 2004. "Information technology investment and firm performance in US retail trade," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 13(7), pages 595-613.
    23. Charles Courtemanche & Art Carden, 2014. "Competing with Costco and Sam's Club: Warehouse Club Entry and Grocery Prices," Southern Economic Journal, Southern Economic Association, vol. 80(3), pages 565-585, January.
    24. 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.
    25. Chevalier, Judith A, 1995. "Do LBO Supermarkets Charge More? An Empirical Analysis of the Effects of LBOs on Supermarket Pricing," Journal of Finance, American Finance Association, vol. 50(4), pages 1095-1112, September.
    26. Wilson, Tom, 1976. "Where Do We Stand On Upc Implementation," Journal of Food Distribution Research, Food Distribution Research Society, vol. 7(1), pages 1-7, February.
    27. David C. Parsley & Shang-Jin Wei, 1996. "Convergence to the Law of One Price Without Trade Barriers or Currency Fluctuations," The Quarterly Journal of Economics, Oxford University Press, vol. 111(4), pages 1211-1236.
    28. James G. Mulligan & Nilotpal Das, 2004. "Vintage Effects and the Diffusion of Time-Saving Technological Innovations: The Adoption of Optical Scanners by U.S. Supermarkets."," Working Papers 04-06, University of Delaware, Department of Economics.
    29. Chevalier, Judith A & Scharfstein, David S, 1996. "Capital-Market Imperfections and Countercyclical Markups: Theory and Evidence," American Economic Review, American Economic Association, vol. 86(4), pages 703-725, September.
    30. Erik Brynjolfsson & Lorin M. Hitt, 2003. "Computing Productivity: Firm-Level Evidence," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 793-808, November.
    31. Jonathan Beck & Michal Grajek & Christian Wey, 2011. "Estimating level effects in diffusion of a new technology: barcode scanning at the checkout counter," Applied Economics, Taylor & Francis Journals, vol. 43(14), pages 1737-1748.
    32. David A. Matsa, 2011. "Competition and Product Quality in the Supermarket Industry," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1539-1591.
    33. Emek Basker & Shawn Klimek & Pham Hoang Van, 2012. "Supersize It: The Growth of Retail Chains and the Rise of the “Big‐Box” Store," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 541-582, September.
    34. Lakshman Krishnamurthi & S. P. Raj, 1991. "An Empirical Analysis of the Relationship Between Brand Loyalty and Consumer Price Elasticity," Marketing Science, INFORMS, vol. 10(2), pages 172-183.
    35. Levin, Sharon G & Levin, Stanford L & Meisel, John B, 1987. "A Dynamic Analysis of the Adoption of a New Technology: The Case of Optical Scanners," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 12-17, February.
    36. repec:rje:randje:v:37:y:2006:3:p:543-561 is not listed on IDEAS
    37. Liran Einav & Ephraim Leibtag & Aviv Nevo, 2010. "Recording discrepancies in Nielsen Homescan data: Are they present and do they matter?," Quantitative Marketing and Economics (QME), Springer, vol. 8(2), pages 207-239, June.
    38. Vishal P. Singh & Karsten T. Hansen & Robert C. Blattberg, 2006. "Market Entry and Consumer Behavior: An Investigation of a Wal-Mart Supercenter," Marketing Science, INFORMS, vol. 25(5), pages 457-476, September.
    39. Paul R. Messinger & Chakravarthi Narasimhan, 1995. "Has Power Shifted in the Grocery Channel?," Marketing Science, INFORMS, vol. 14(2), pages 189-223.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Florin Maican & Matilda Orth, 2017. "Productivity Dynamics and the Role of ‘Big-Box’ Entrants in Retailing," Journal of Industrial Economics, Wiley Blackwell, vol. 65(2), pages 397-438, June.
    2. Maican, Florin & Orth, Matilda, 2018. "Inventory Behavior, Demand, and Productivity in Retail," CEPR Discussion Papers 13308, C.E.P.R. Discussion Papers.
    3. Peter Mayerhofer & Peter Huber & Dieter Pennerstorfer, 2017. "Handel und Einzelhandel im Wiener Beschäftigungssystem. Arbeitsmarktrelevanz, Arbeitsplatzcharakteristika, absehbare Herausforderungen," WIFO Studies, WIFO, number 61951.
    4. Levy, Daniel, 2013. "Discussion of "Change at the Checkout: Tracing the Impact of a Process Innovation" by Emek Basker," MPRA Paper 52605, University Library of Munich, Germany.
    5. Soetevent, Adriaan R. & Bružikas, Tadas, 2018. "The impact of process innovation on prices: Evidence from automated fuel retailing in The Netherlands," European Economic Review, Elsevier, vol. 110(C), pages 181-196.
    6. Francine Lafontaine & Jagadeesh Sivadasan, 2020. "The Recent Evolution of Physical Retail Markets: Online Retailing, Big Box Stores, and the Rise of Restaurants," NBER Chapters, in: The Role of Innovation and Entrepreneurship in Economic Growth, National Bureau of Economic Research, Inc.
    7. Maican, Florin & Orth, Matilda, 2018. "Determinants of Economies of Scope in Retail," Working Paper Series 1247, Research Institute of Industrial Economics, revised 11 Jul 2020.
    8. Rowena Gray & Giulia Montresor & Greg C. Wright, 2017. "Processing Immigration Shocks: Firm Responses on the Innovation Margin," CESifo Working Paper Series 6624, CESifo.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Emek Basker, 2012. "Raising the Barcode Scanner: Technology and Productivity in the Retail Sector," NBER Chapters, in: Standards, Patents and Innovations, National Bureau of Economic Research, Inc.
    2. Emek Basker, 2012. "Raising the Barcode Scanner: Technology and Productivity in the Retail Sector," NBER Chapters,in: Standards, Patents and Innovations National Bureau of Economic Research, Inc.
    3. Emek Basker & Shawn Klimek & Pham Hoang Van, 2012. "Supersize It: The Growth of Retail Chains and the Rise of the “Big‐Box” Store," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 541-582, September.
    4. Ellickson, Paul B. & Grieco, Paul L.E., 2013. "Wal-Mart and the geography of grocery retailing," Journal of Urban Economics, Elsevier, vol. 75(C), pages 1-14.
    5. Jonathan Beck & Michal Grajek & Christian Wey, 2005. "Hypermarket Competition and the Diffusion of Retail Checkout Barcode Scanning," CIG Working Papers SP II 2005-19, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    6. Emek Basker & Timothy Simcoe, 2017. "Upstream, Downstream: Diffusion and Impacts of the Universal Product Code," Working Papers 17-66, Center for Economic Studies, U.S. Census Bureau.
    7. Florin Maican & Matilda Orth, 2017. "Productivity Dynamics and the Role of ‘Big-Box’ Entrants in Retailing," Journal of Industrial Economics, Wiley Blackwell, vol. 65(2), pages 397-438, June.
    8. Peter Mayerhofer & Peter Huber & Dieter Pennerstorfer, 2017. "Handel und Einzelhandel im Wiener Beschäftigungssystem. Arbeitsmarktrelevanz, Arbeitsplatzcharakteristika, absehbare Herausforderungen," WIFO Studies, WIFO, number 61951.
    9. Emek Basker & Muhammad Taimur Khan, 2016. "Does the Minimum Wage Bite into Fast-Food Prices?," Journal of Labor Research, Springer, vol. 37(2), pages 129-148, June.
    10. Matias Busso & Sebastian Galiani, 2019. "The Causal Effect of Competition on Prices and Quality: Evidence from a Field Experiment," American Economic Journal: Applied Economics, American Economic Association, vol. 11(1), pages 33-56, January.
    11. Zipitría, Leandro, 2011. "Impacto económico del Supermercadismo [The Economics of Supermarkets: A Brief Literature Review]," MPRA Paper 28419, University Library of Munich, Germany.
    12. Brianna Cardiff-Hicks & Francine Lafontaine & Kathryn Shaw, 2015. "Do Large Modern Retailers Pay Premium Wages?," ILR Review, Cornell University, ILR School, vol. 68(3), pages 633-665, May.
    13. Basker, Emek & Vickers, Chris & Ziebarth, Nicolas L., 2018. "Competition, productivity, and survival of grocery stores in the Great Depression," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 282-315.
    14. Basker, Emek, 2011. "The Causes and Consequences of Wal-Mart’s Growth," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 5, pages 110-134.
    15. Paul L. E. Grieco, 2014. "Discrete games with flexible information structures: an application to local grocery markets," RAND Journal of Economics, RAND Corporation, vol. 45(2), pages 303-340, June.
    16. Volpe, Richard J., III, 2011. "Evaluating the Performance of U.S. Supermarkets: Pricing Strategies, Competition from Hypermarkets, and Private Labels," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(3), pages 1-16, December.
    17. Emek Basker & Shawn Klimek & Pham Hoang Van, 2008. "Supersize It: The Growth of Retail Chains and the Rise of the "Big Box" Retail Format," Working Papers 0809, Department of Economics, University of Missouri, revised 30 Sep 2010.
    18. Emmanuel Dhyne & Luis J. Alvarez & Herve Le Bihan & Giovanni Veronese & Daniel Dias & Johannes Hoffmann & Nicole Jonker & Patrick Lunnemann & Fabio Rumler & Jouko Vilmunen, 2006. "Price Changes in the Euro Area and the United States: Some Facts from Individual Consumer Price Data," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 171-192, Spring.
    19. Erik Brynjolfsson & Kristina McElheran, 2016. "Data in Action: Data-Driven Decision Making in U.S. Manufacturing," Working Papers 16-06, Center for Economic Studies, U.S. Census Bureau.
    20. Emek Basker & Michael Noel, 2009. "The Evolving Food Chain: Competitive Effects of Wal‐Mart's Entry into the Supermarket Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 977-1009, December.

    More about this item

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jindec:v:63:y:2015:i:2:p:339-370. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.