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Targeted Price Controls on Supermarket Products

Author

Listed:
  • Diego Aparicio

    (IESE Business School)

  • Alberto Cavallo

    (Harvard Business School and NBER)

Abstract

We study the impact of targeted price controls on supermarket products in Argentina. Using daily prices for controlled and noncontrolled goods, we examine the effects on inflation, product availability, entry and exit, and price dispersion. First, price controls have only a small and temporary effect on inflation that reverses soon after the controls are lifted. Second, contrary to common belief, controlled goods are consistently available for sale. Third, firms respond by introducing new varieties at higher prices. Overall, our results show that targeted price controls are just as ineffective as more traditional policies of price controls in reducing aggregate inflation.

Suggested Citation

  • Diego Aparicio & Alberto Cavallo, 2021. "Targeted Price Controls on Supermarket Products," The Review of Economics and Statistics, MIT Press, vol. 103(1), pages 60-71, March.
  • Handle: RePEc:tpr:restat:v:103:y:2021:i:1:p:60-71
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/rest_a_00880
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    References listed on IDEAS

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    3. Ivan Mužić & Ivan Žilić, 2023. "Can selective price controls fight off inflation? Lessons from milk products in Croatia," Working Papers 71, The Croatian National Bank, Croatia.

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