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Competition, business cycles, and price flexibility in grocery stores

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  • Glandon, P.J.
  • Jaremski, Matthew

Abstract

We study how local competition affects price flexibility over the business cycle using a nationally representative US scanner database covering 2001 to 2011. We find that the entry of a grocery store has no significant effect on the frequency of price change at incumbent grocers in the same zip code, but the entry of a Walmart results in more frequent price changes. Looking across time, price change frequency increases during expansions and decreases during downturns; however, all else being equal, the presence of a Walmart mitigates much of this cyclical behavior, compared to other grocery store competitors that have no differential effect across the business cycle.

Suggested Citation

  • Glandon, P.J. & Jaremski, Matthew, 2019. "Competition, business cycles, and price flexibility in grocery stores," Economics Letters, Elsevier, vol. 181(C), pages 137-139.
    • Handle: RePEc:eee:ecolet:v:181:y:2019:i:c:p:137-139
    DOI: 10.1016/j.econlet.2019.05.020
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    References listed on IDEAS

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    More about this item

    Keywords

    Price competition; Price flexibility; Sales prices; Walmart; Business cycles;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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