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Menu Costs, Posted Prices, and Multiproduct Retailers

Author

Listed:
  • Shantanu Dutta

    (FBE, Marshall School of Business - USC - University of Southern California)

  • Mark Bergen

    (Carlson School of Management - University of Minnesota [Twin Cities] - University of Minnesota System)

  • Daniel Levy

    () (RCEA - Rimini Center for Economic Analysis, Emory University [Atlanta, GA], Bar-Ilan University [Israël])

  • Robert Venable

    ()

Abstract

We use a unique store-level data set to directly measure menu costs and to study the price change process at a large U.S. drugstore chain. We compare and contrast the magnitude of these measures with similar measures from four large U.S. supermarket chains. We find that (1) the actual magnitude of menu costs as a share of revenues, (2) menu costs per price change, (3) the frequent use of promotional pricing, and (4) the use of weekly pricing rules are similar across both retail formats. Given that the main common features of these two types of retail formats are that (i) they both use posted prices and (ii) both are multiproduct retailers selling a large number of products, our findings suggest that the magnitude of the menu cost components we measure, and the price change practices we document, may be generalizable across retail formats with these two features.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Shantanu Dutta & Mark Bergen & Daniel Levy & Robert Venable, 1999. "Menu Costs, Posted Prices, and Multiproduct Retailers," Post-Print hal-02385591, HAL.
  • Handle: RePEc:hal:journl:hal-02385591
    DOI: 10.2307/2601217
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-02385591
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory

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