RIGID PRICES: EVIDENCE FROM U.S. SCANNER DATA |
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Authors: | Jeffrey R Campbell Benjamin Eden |
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Institution: | 1. Federal Reserve Bank of Chicago, , U.S.A.;2. CentER, Tilburg University, , the Netherlands |
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Abstract: | This article uses weekly scanner data from two small U.S. cities to characterize time and state dependence of grocers' pricing decisions. In these data, the probability of a nominal adjustment declines with the time since the last price change. A store's price for a particular product typically goes through several price changes in rapid succession before settling down. We also detect state dependence: The probability of a nominal adjustment is highest when a store's price substantially differs from the average of other stores' prices. However, extreme relative prices typically reflect the store's recent changes instead of changes in average prices. |
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