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The Elusive Law of One Retail Chain Price

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  • Nicoletta Berardi

    (Banque de France)

Abstract

We investigate whether prices for identical products differ across more than 1600 French supermarkets and find non-trivial price dispersion, albeit more limited than in other countries. We determine that more than 80% of the total variance of the observed dispersion of relative prices across stores and time is explained by the spatial permanent component (stores consistently sell products at relatively high or low prices), essentially driven by persistent heterogeneity in retail chain pricing. The analysis of between and within retail chain price dispersion also provides evidence consistent with a rather centralized multi-stage price setting, in which local stores play a much smaller role than retail buying groups and local branches.

Suggested Citation

  • Nicoletta Berardi, 2023. "The Elusive Law of One Retail Chain Price," Journal of Industry, Competition and Trade, Springer, vol. 23(3), pages 261-281, December.
    • Handle: RePEc:kap:jincot:v:23:y:2023:i:3:d:10.1007_s10842-023-00404-3
    DOI: 10.1007/s10842-023-00404-3
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    More about this item

    Keywords

    Price dispersion; Retail chain pricing; Multi-stage price setting;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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