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Shop Around and You Pay More

Author

Listed:
  • Ji Yan
  • Kun Tian
  • Huw D. Dixon
  • Saeed Heravi
  • Peter Morgan

Abstract

We examine the relationship between the prices paid by households and their shopping patterns measured in terms of shopping frequency and the range of stores visited. We use the TNS data which allows us to control for household heterogeneity. The main contribution of the paper is that we find proper instruments to correct for endogeneity of shopping patterns. And we find that there exists a robust positive relationship between the price paid and the number of store visited. We argue that visiting larger number of stores makes households less likely to save using store-loyalty discounts.

Suggested Citation

  • Ji Yan & Kun Tian & Huw D. Dixon & Saeed Heravi & Peter Morgan, 2014. "Shop Around and You Pay More," CESifo Working Paper Series 4940, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4940
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp4940.pdf
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    References listed on IDEAS

    as
    1. Rachel Griffith & Martin O'Connell, 2010. "Public Policy towards Food Consumption," Fiscal Studies, Institute for Fiscal Studies, vol. 31(4), pages 481-507, December.
    2. Mark Aguiar & Erik Hurst, 2007. "Life-Cycle Prices and Production," American Economic Review, American Economic Association, vol. 97(5), pages 1533-1559, December.
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    4. Rachel Griffith & Ephraim Leibtag & Andrew Leicester & Aviv Nevo, 2009. "Consumer Shopping Behavior: How Much Do Consumers Save?," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 99-120, Spring.
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    7. Pierre Dubois & Rachel Griffith & Aviv Nevo, 2014. "Do Prices and Attributes Explain International Differences in Food Purchases?," American Economic Review, American Economic Association, vol. 104(3), pages 832-867, March.
    8. Rachel Griffith & Martin O'Connell, 2009. "The Use of Scanner Data for Research into Nutrition," Fiscal Studies, Institute for Fiscal Studies, vol. 30(Special I), pages 339-365, December.
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    10. Karen M. Stilley & J. Jeffrey Inman & Kirk L. Wakefield, 2010. "Planning to Make Unplanned Purchases? The Role of In-Store Slack in Budget Deviation," Journal of Consumer Research, Oxford University Press, vol. 37(2), pages 264-278, August.
    11. Mark Aguiar & Erik Hurst, 2005. "Consumption versus Expenditure," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 919-948, October.
    12. Park, C Whan & Iyer, Easwar S & Smith, Daniel C, 1989. " The Effects of Situational Factors on In-Store Grocery Shopping Behavior: The Role of Store Environment and Time Available for Shopping," Journal of Consumer Research, Oxford University Press, vol. 15(4), pages 422-433, March.
    13. Andrew Ainslie & Peter E. Rossi, 1998. "Similarities in Choice Behavior Across Product Categories," Marketing Science, INFORMS, vol. 17(2), pages 91-106.
    14. David R. Bell & James M. Lattin, 1998. "Shopping Behavior and Consumer Preference for Store Price Format: Why “Large Basket” Shoppers Prefer EDLP," Marketing Science, INFORMS, vol. 17(1), pages 66-88.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    shopping frequency; price; store loyalty; demographics;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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