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Cost of Being Poor: Retail Price and Consumer Price Search Differences across Inner-City and Suburban Neighborhoods

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  • Debabrata Talukdar

Abstract

This research undertakes a carefully designed and detailed empirical study to gain insights into (1) the extent of price differentials between wealthy and poor neighborhoods; (2) what induces such differentials, especially the nature and intensity of competitive environments, including mass merchandisers like Wal-Mart; and (3) their relative impacts. It finds a price differential of about 10%-15% for everyday items. Even after controlling for store size and competition, prices are found to be 2%-5% higher in poor areas. It also finds that it is not the poverty level per se but access to cars that acts as a key determinant of consumers' price search patterns. (c) 2008 by JOURNAL OF CONSUMER RESEARCH, Inc..

Suggested Citation

  • Debabrata Talukdar, 2008. "Cost of Being Poor: Retail Price and Consumer Price Search Differences across Inner-City and Suburban Neighborhoods," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 35(3), pages 457-471, July.
    • Handle: RePEc:oup:jconrs:v:35:y:2008:i:3:p:457-471
    DOI: 10.1086/589563
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    Cited by:

    1. Matthew G. Nagler, 2016. "Equilibrium with Consumer Adjustment to Choice," Working Papers 10, City University of New York Graduate Center, Ph.D. Program in Economics.
    2. Jayashankar, Priyanka & Raju, Sekar, 2020. "The effect of social cohesion and social networks on perceptions of food availability among low-income consumers," Journal of Business Research, Elsevier, vol. 108(C), pages 316-323.
    3. Talukdar, Debabrata, 2018. "Cost of being a slum dweller in Nairobi: Living under dismal conditions but still paying a housing rent premium," World Development, Elsevier, vol. 109(C), pages 42-56.
    4. Ali Besharat & Gia Nardini & Rhiannon MacDonnell Mesler, 2024. "Bringing Ethical Consumption to the Forefront in Emerging Markets: The Role of Product Categorization," Journal of Business Ethics, Springer, vol. 191(4), pages 777-792, May.
    5. Denton R. Vaughan & Barbara A. Haley & Aref N. Dajani, 2021. "Ten years later: Self‐sufficiency of welfare mothers before the Great Recession," Poverty & Public Policy, John Wiley & Sons, vol. 13(2), pages 184-223, June.
    6. Elizabeth Howlett & Cassandra Davis & Scot Burton, 2016. "From Food Desert to Food Oasis: The Potential Influence of Food Retailers on Childhood Obesity Rates," Journal of Business Ethics, Springer, vol. 139(2), pages 215-224, December.
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    8. Theine, Hendrik & Humer, Stefan & Moser, Mathias & Schnetzer, Matthias, 2022. "Emissions inequality: Disparities in income, expenditure, and the carbon footprint in Austria," Ecological Economics, Elsevier, vol. 197(C).
    9. Ronald Paul Hill, 2017. "Essay on Moral Marketer Behaviour: Beyond Corporate Social Responsibility," Global Business Review, International Management Institute, vol. 18(3_suppl), pages 70-74, June.
    10. Jesse M Cunha & Giacomo De Giorgi & Seema Jayachandran, 2019. "The Price Effects of Cash Versus In-Kind Transfers," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(1), pages 240-281.
    11. Adrienne Ohler & Vincent Smith, 2013. "Population Characteristics And Price Dispersion In The Market For Prescription Drugs," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 486-502, July.
    12. Cheryl Nakata & Elif Izberk-Bilgin & Lisa Sharp & Jelena Spanjol & Anna Shaojie Cui & Stephanie Y. Crawford & Yazhen Xiao, 2019. "Chronic illness medication compliance: a liminal and contextual consumer journey," Journal of the Academy of Marketing Science, Springer, vol. 47(2), pages 192-215, March.
    13. Adrienne M. Ohler, 2011. "Who Searches for Low Prices? Population Characteristics and Price Dispersion in the Market for Prescription Drugs," Working Paper Series 20110701, Illinois State University, Department of Economics.
    14. Arturo E. Osorio & Maria G. Corradini & Jerome D. Williams, 2013. "Remediating food deserts, food swamps, and food brownfields: helping the poor access nutritious, safe, and affordable food," AMS Review, Springer;Academy of Marketing Science, vol. 3(4), pages 217-231, December.
    15. Rafael Becerril-Arreola & Randolph E. Bucklin & Raphael Thomadsen, 2021. "Effects of Income Distribution Changes on Assortment Size in the Mainstream Grocery Channel," Management Science, INFORMS, vol. 67(9), pages 5878-5900, September.
    16. Davis, Brennan & Grier, Sonya, 2015. "A tale of two urbanicities: Adolescent alcohol and cigarette consumption in high and low-poverty urban neighborhoods," Journal of Business Research, Elsevier, vol. 68(10), pages 2109-2116.
    17. Priyanka Jayashankar & Samantha Cross, 2020. "Expanding exchange: how institutional actors shape food-sharing exchange systems," AMS Review, Springer;Academy of Marketing Science, vol. 10(1), pages 116-134, June.
    18. Marieke Huysentruyt & Eva Lefevere & Carlo Menon, 2010. "Bank Location and Financial Liberalization Reforms: Evidence from Microgeographic Data," SERC Discussion Papers 0058, Centre for Economic Performance, LSE.
    19. Havewala, Ferzana, 2021. "The dynamics between the food environment and residential segregation: An analysis of metropolitan areas," Food Policy, Elsevier, vol. 103(C).
    20. Chowdhury, K.P., 2021. "Functional analysis of generalized linear models under non-linear constraints with applications to identifying highly-cited papers," Journal of Informetrics, Elsevier, vol. 15(1).
    21. Gauri, Dinesh K. & Jindal, Rupinder P. & Ratchford, Brian & Fox, Edward & Bhatnagar, Amit & Pandey, Aashish & Navallo, Jonathan R. & Fogarty, John & Carr, Stephen & Howerton, Eric, 2021. "Evolution of retail formats: Past, present, and future," Journal of Retailing, Elsevier, vol. 97(1), pages 42-61.
    22. Evelyne Rousselet & Bérangère Brial & Romain Cadario & Amina Béji-Bécheur, 2020. "Moral Intensity, Issue Characteristics, and Ethical Issue Recognition in Sales Situations," Journal of Business Ethics, Springer, vol. 163(2), pages 347-363, May.
    23. Inge Geyskens & Barbara Deleersnyder & Marnik G. Dekimpe & Didi Lin, 2024. "Do consumers benefit from national-brand listings by hard discounters?," Journal of the Academy of Marketing Science, Springer, vol. 52(1), pages 97-118, January.
    24. Byrne, David P. & Martin, Leslie A., 2021. "Consumer search and income inequality," International Journal of Industrial Organization, Elsevier, vol. 79(C).
    25. Ronald Paul Hill & Daniel Cunningham & Gramercy Gentlemen, 2016. "Dehumanization and Restriction inside a Maximum Security Prison: Novel Insights about Consumer Acquisition and Ownership," Journal of the Association for Consumer Research, University of Chicago Press, vol. 1(2), pages 295-313.

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