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Macroeconomic Implications of Uniform Pricing

Author

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  • Diego Daruich
  • Julian Kozlowski

Abstract

We compile a new database of grocery prices in Argentina. We find uniform pricing both within and across regions—i.e., prices almost do not vary within stores of a chain. In line with uniform pricing, prices in stores of chains operating in one region react to changes in regional employment, while prices in multi-region chains do not. Using a quantitative regional model with multi-region firms and uniform pricing, we find a one-half smaller elasticity of prices to a regional than an aggregate shock. This result highlights that some caution may be necessary when using regional shocks to estimate aggregate elasticities.

Suggested Citation

  • Diego Daruich & Julian Kozlowski, 2019. "Macroeconomic Implications of Uniform Pricing," Working Papers 2019-024, Federal Reserve Bank of St. Louis, revised 11 May 2021.
  • Handle: RePEc:fip:fedlwp:2019-024
    DOI: 10.20955/wp.2019.024
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    More about this item

    Keywords

    Price Dispersion; Regional Economics; Uniform Pricing;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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