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The Size and Frequency of Price Changes: Evidence from Grocery Stores

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Abstract

We analyze a data set (on grocerystore prices for lettuce) with many advantages overthose used previously to explain firm heterogeneity inthe size and frequency of price changes. Despitecommon shocks to their input price, grocers' pricechanges vary widely in size and frequency. We testhypotheses emerging from a theoretical framework. Wefind that product, firm, and market characteristicsassociated with the benefits from and costs ofchanging price explain grocer-to-grocer variation inthe size and frequency of price changes. Moreconcentrated markets, larger firm size, and thinnerproduct markets lead to infrequent and large pricechanges.

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Authors and Affiliations

  1. Institute of Government and Public Affairs, University of Illinois, 1007 West Nevada Street, Urbana, IL, 61801, U.S.A.

    Elizabeth T. Powers

  2. Department of Economics, University of Illinois, 1007 West Nevada Street, Urbana, IL, 61801, U.S.A.

    Nicholas J. Powers

Authors
  1. Elizabeth T. Powers
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  2. Nicholas J. Powers
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Powers, E.T., Powers, N.J. The Size and Frequency of Price Changes: Evidence from Grocery Stores. Review of Industrial Organization 18, 397–416 (2001). https://doi.org/10.1023/A:1007826627443

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  • DOI: https://doi.org/10.1023/A:1007826627443

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