| Abstract: | The wide range of prices found in local food markets allows consumers to reduce the cost of food purchases through comparison shopping in two or more stores. Little is known, however, about how much can be saved by comparing prices for a whole market basket of food items. This paper presents evidence relating to the savings which can be realized through comparison shopping, and shows how savings can vary in markets of different sizes. Analysis of data on the prices of a market basket of food items in 15 local markets indicates that there are substantial differences in the dispersion of prices between small, medium and large food markets. The effect of these differences is to make the potential saving from comparison shopping much greater in large market areas, as compared with small ones. It is found that the dollar benefits of comparison shopping to consumers are likely to be greater than the costs of search in large shopping areas, but may not justify the costs in small and medium size areas. |
