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Non-price rigidity and cost of adjustment

Author

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  • Georg Müller

    (Deloitte Consulting [Diegem])

  • Mark Bergen

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

  • Shantanu Dutta

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

  • Daniel Levy

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

Abstract

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 4,500 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.

Suggested Citation

  • Georg Müller & Mark Bergen & Shantanu Dutta & Daniel Levy, 2007. "Non-price rigidity and cost of adjustment," Post-Print hal-02387449, HAL.
  • Handle: RePEc:hal:journl:hal-02387449
    DOI: 10.1002/mde.1379
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-02387449
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    Cited by:

    1. Young, Andrew T. & Levy, Daniel, 2014. "Explicit Evidence of an Implicit Contract," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 804-832.
    2. Kumar, Subodha & Sethi, Suresh P., 2009. "Dynamic pricing and advertising for web content providers," European Journal of Operational Research, Elsevier, vol. 197(3), pages 924-944, September.
    3. Laura Birg & Anna Goeddeke, 2016. "Christmas Economics—A Sleigh Ride," Economic Inquiry, Western Economic Association International, vol. 54(4), pages 1980-1984, October.
    4. Daniel Levy, 2007. "Price rigidity and flexibility: new empirical evidence," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 639-647.

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