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Non-price rigidity and cost of adjustment

  • Georg Müller

    (Monitor Group, Chicago, IL, USA)

  • Mark Bergen

    (University of Minnesota, Minneapolis, MN, USA)

  • Shantanu Dutta

    (University of Southern California, Los Angeles, CA, USA)

  • Daniel Levy

    (Bar-Ilan University, Ramat-Gan, Israel)

There has been increasing interest in understanding how firms undertake non-price adjustment activities, especially in situations where prices may be rigid despite changes in market conditions. Using scanner price data for over 4500 different food products from a large US supermarket chain, we document periods of rigidity in product additions and deletions: new products are less likely to be introduced, and existing products are less likely to be discontinued during holiday periods than throughout the rest of the year. We argue that this is due to higher costs of undertaking these kinds of product assortment activities during holiday periods. We discuss how this relates to the exiting literature on non-price adjustment and price rigidity. Copyright © 2007 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1379
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Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 28 (2007)
Issue (Month): 7 ()
Pages: 817-832

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Handle: RePEc:wly:mgtdec:v:28:y:2007:i:7:p:817-832
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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