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Asymmetric price adjustment: evidence from weekly product-level scanner price data

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  • Georg Müller

    (Monitor Group, Chicago IL, USA)

  • Sourav Ray

    (McMaster University, Hamilton ON, Canada)

Abstract

We investigate asymmetric price responses by considering a unique, highly disaggregate retailer- and product-level time series at a major supermarket chain. We find asymmetry exists, but is limited in scope and there is no evidence of a pervasive chain wide asymmetric pricing strategy. To explain product level variation, we borrow from both economic and marketing perspectives to suggest menu costs, operational efficiency, competition, and consumer perceptions as important factors. The evidence suggests an efficiency-based rationale for asymmetry. This study complements that of Peltzman (2000. J. Polit. Econ. 108 (3): 466-502.) who found no systematic asymmetry in a study of the same data considered at a more aggregate level. Copyright © 2007 John Wiley & Sons, Ltd.

Suggested Citation

  • Georg Müller & Sourav Ray, 2007. "Asymmetric price adjustment: evidence from weekly product-level scanner price data," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 723-736.
  • Handle: RePEc:wly:mgtdec:v:28:y:2007:i:7:p:723-736
    DOI: 10.1002/mde.1377
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    File URL: http://hdl.handle.net/10.1002/mde.1377
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    References listed on IDEAS

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    Cited by:

    1. Villas-Boas, Sofia B & Bonnet, Celine, 2016. "Asymmetric Consumer Price Responses and Asymmetric Cost Pass-Through," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt172676f9, Department of Agricultural & Resource Economics, UC Berkeley.
    2. Diego Escobari, 2013. "Asymmetric Price Adjustments in Airlines," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 34(2), pages 74-85, March.
    3. Chen, Haipeng (Allan) & Levy, Daniel & Ray, Sourav & Bergen, Mark, 2008. "Asymmetric price adjustment in the small," Journal of Monetary Economics, Elsevier, vol. 55(4), pages 728-737, May.
    4. Claire Loupias & Patrick Sevestre, 2013. "Costs, Demand, and Producer Price Changes," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 315-327, March.
    5. Daniel Levy, 2007. "Price rigidity and flexibility: new empirical evidence," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 639-647.
    6. Matthew Chesnes, 2016. "Asymmetric Pass-Through in U.S. Gasoline Prices," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    7. Vespignani, Joaquin L., 2012. "Modelling asymmetric consumer demand response: Evidence from scanner data," MPRA Paper 55601, University Library of Munich, Germany.

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