NDLI: Uniform Pricing in US Retail Chains

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Uniform Pricing in US Retail Chains

Content Provider	Scilit
Author	Vigna, Stefano Della Gentzkow, Matthew
Copyright Year	2019
Description	Journal: SSRN Electronic Journal We show that most US food, drugstore, and mass merchandise chains charge nearly-uniform prices across stores, despite wide variation in consumer demographics and competition. Demand estimates reveal substantial within-chain variation in price elasticities and suggest that the median chain sacrifices $16m of annual profit relative to a benchmark of optimal prices. In contrast, differences in average prices between chains are broadly consistent with the optimal benchmark. We discuss a range of explanations for nearly-uniform pricing, highlighting managerial inertia and brand-image concerns as mechanisms frequently mentioned by industry participants. Relative to our optimal benchmark, uniform pricing may significantly increase the prices paid by poorer households relative to the rich, dampen the response of prices to local economic shocks, alter the analysis of mergers in antitrust, and shift the incidence of intra-national trade costs.
Related Links	http://www.nber.org/papers/w23996.pdf https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=3367978
ISSN	10914358
e-ISSN	15565068
DOI	10.2139/ssrn.3367978
Journal	SSRN Electronic Journal
Language	English
Publisher	Elsevier BV
Publisher Date	2019-03-13
Access Restriction	Open
Subject Keyword	Journal: SSRN Electronic Journal Mathematical Social Sciences Uniform Pricing Optimal Benchmark Wide Variation Profit Relative National Trade Poorer Households
Content Type	Text
Resource Type	Article
Subject	Public Health, Environmental and Occupational Health Psychiatry and Mental Health

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