Department of Economics and Business Economics

Relative Price Dispersion: Evidence and Theory

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaperJournal articleResearchpeer-review

DOI

  • Greg Kaplan, University of Chicago
  • ,
  • Guido Menzio, NBER, National Bureau of Economic Research, New York University
  • ,
  • Leena Rudanko, Fed Reserve Bank Philadelphia, Federal Reserve System - USA, Federal Reserve Bank - Philadelphia
  • ,
  • Nicholas Trachter, Fed Reserve Bank Richmond, Federal Reserve System - USA, Federal Reserve Bank - Richmond

Relative price dispersion refers to persistent differences in the price that different retailers set for one particular good relative to the price they set for other goods. Relative price dispersion accounts for 30 percent of the overall variance of prices at which the same good is sold during the same week and in the same market. Relative price dispersion can be rationalized as the consequence of a pricing strategy used by sellers to discriminate between high-valuation buyers who need to make all of their purchases in one store, and low-valuation buyers who are able to purchase different items in different stores.

Original languageEnglish
JournalAmerican Economic Journal: Microeconomics
Volume11
Issue3
Pages (from-to)68-124
Number of pages57
ISSN1945-7669
DOIs
Publication statusPublished - Aug 2019

    Research areas

  • SEARCH, MODEL, CONSUMPTION, COMPETITION, MARKET, DISTRIBUTIONS, INVENTORIES, INEQUALITY, SALES

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