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Retail Sales: A Study of Pricing Behavior in Supermarkets

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  • Martin Pesendorfer

    (Yale University)

Abstract

This article examines temporary price reductions, or sales, on ketchup products in supermarkets in Springfield, Missouri, between 1986 and 1988. The descriptive data analysis indicates that intertemporal demand effects are present. A model of intertemporal pricing in which demand increases with the number of time periods since the last sale is considered and confronted with the data. The estimates indicate that demand increases in the time elapsed since the last sale. The timing of ketchup sales is well explained by the number of time periods since the last sale. Also, competition between retailers for accumulated shoppers influences the sale decision.

Suggested Citation

  • Martin Pesendorfer, 2002. "Retail Sales: A Study of Pricing Behavior in Supermarkets," The Journal of Business, University of Chicago Press, vol. 75(1), pages 33-66, January.
  • Handle: RePEc:ucp:jnlbus:v:75:y:2002:i:1:p:33-66
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    File URL: http://dx.doi.org/10.1086/323504
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