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Price Dispersion And Demand Uncertainty: Evidence From Us Scanner Data

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  • Benjamin Eden

    (Vanderbilt University)

Abstract

I use a flexible price version of the Prescott (1975) hotels model to explain variations in price dispersion across goods sold by supermarkets in Chicago. The main finding is that price dispersion measures are positively correlated with proxies for demand uncertainty. I also find that price dispersion measures are negatively correlated with the average price but are not negatively correlated with the revenues from selling the good (across stores and weeks) and with the number of stores that sell the good.

Suggested Citation

  • Benjamin Eden, 2013. "Price Dispersion And Demand Uncertainty: Evidence From Us Scanner Data," Vanderbilt University Department of Economics Working Papers 13-00015, Vanderbilt University Department of Economics.
    • Handle: RePEc:van:wpaper:vuecon-sub-13-00015
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    Cited by:

    1. Söderberg, Magnus & Vesterberg, Mattias, 2023. "How demand uncertainty influences electricity network prices under revenue-cap regulation: The case of Sweden," Energy Economics, Elsevier, vol. 127(PB).
    2. Günter J. Hitsch & Ali Hortaçsu & Xiliang Lin, 2021. "Prices and promotions in U.S. retail markets," Quantitative Marketing and Economics (QME), Springer, vol. 19(3), pages 289-368, December.
    3. de Meza, David & Reito, Francesco, 2021. "Macro shocks cause equilibrium price dispersion," Economics Letters, Elsevier, vol. 208(C).
    4. Kaldasch, Joachim, 2015. "Dynamic Model of the Price Dispersion of Homogeneous Goods," MPRA Paper 64723, University Library of Munich, Germany.
    5. Howell, Charles & Grifell-Tatjé, Emili, 2022. "Market heterogeneity and the relationship between competition and price dispersion: Evidence from the U.S. airline market," Transport Policy, Elsevier, vol. 125(C), pages 218-230.
    6. Doron Sayag & Avichai Snir & Daniel Levy, 2024. "Small Price Changes, Sales Volume, and Menu Cost," Papers 2403.07166, arXiv.org.
    7. Ray, Sourav & Snir, Avichai & Levy, Daniel, 2023. "Retail Pricing Format and Rigidity of Regular Prices," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 1-1.
    8. Greg Kaplan & Guido Menzio, 2015. "The Morphology Of Price Dispersion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56(4), pages 1165-1206, November.
    9. Rachel Griffith & Martin O'Connell & Kate Smith, 2016. "Shopping Around: How Households Adjusted Food Spending Over the Great Recession," Economica, London School of Economics and Political Science, vol. 83(330), pages 247-280, April.
    10. Gaetano Gaballo, 2018. "Price Dispersion, Private Uncertainty, and Endogenous Nominal Rigidities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(2), pages 1070-1110.
    11. Meng-Ying Wang & Li-Chen Chou, 2024. "Evaluating information asymmetry effects on hotel pricing: a comparative analysis before and during the COVID-19 pandemic in the Taiwan’s market," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.
    12. Benjamin Eden, 2014. "Demand uncertainty and efficiency," Vanderbilt University Department of Economics Working Papers 14-00011, Vanderbilt University Department of Economics.
    13. Syed Hasan & Nazmun Ratna & Shamim Shakur, 2019. "Exchange rate, remittances and expenditure of foreign-bornhouseholds: evidence from Australia," Discussion Papers 1901, School of Economics and Finance, Massey University, New Zealand.
    14. Hasan, Syed & Shakur, Shamim & Breunig, Robert, 2021. "Exchange rates and expenditure of households with foreign-born members: Evidence from Australia," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 977-997.

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    More about this item

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L0 - Industrial Organization - - General

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