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The Effects of Mandatory Disclosure of Supermarket Prices

Author

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  • Ater, Itai
  • Rigbi, Oren

Abstract

We study how mandatory online disclosure of supermarket prices affects prices and price dispersion in brick-and-mortar stores. Using data collected before and after a transparency regulation went into effect in the Israeli food retail market, multiple complementary control groups and relying on a differences-in-differences research design, we document a sharp decline in price dispersion and a 4% to 5% drop in prices following the transparency regulation. The price drop varied across stores and products; it was smaller among branded products than among private-label products, and it was smaller among stores and products that were likely to have been associated with more intense search patterns even before prices became transparent (e.g., products in heavy-discount chains; popular products; products that meet stringent kosher requirements). Finally, we show that prices declined as more consumers used price-comparison websites, and we highlight the role of media coverage in encouraging retailers to set lower prices.

Suggested Citation

  • Ater, Itai & Rigbi, Oren, 2017. "The Effects of Mandatory Disclosure of Supermarket Prices," CEPR Discussion Papers 12381, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12381
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    References listed on IDEAS

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    10. Stefano DellaVigna & Matthew Gentzkow, 2017. "Uniform Pricing in US Retail Chains," NBER Working Papers 23996, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Elena Argentesi & Paolo Buccirossi & Roberto Cervone & Tomaso Duso & Alessia Marrazzo, 2018. "Price or Variety? An Evaluation of Mergers Effects in Grocery Retailing," CESifo Working Paper Series 7035, CESifo Group Munich.
    2. repec:eee:jeborg:v:144:y:2017:i:c:p:188-203 is not listed on IDEAS
    3. repec:eee:ecolet:v:162:y:2018:i:c:p:1-4 is not listed on IDEAS

    More about this item

    Keywords

    Price Transparency; Information; Mandatory Disclosure; Retail Food; Supermarkets;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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