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Price flexibility in British supermarkets

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  • Seaton, Jonathan S.
  • Waterson, Michael

Abstract

This paper delivers a significantly different empirical perspective on micro pricing behaviour and its impact on macroeconomic processes than previous studies. We examine a seven year period of pricing behaviour by the major British supermarkets encompassing the recession year 2008 and the partial recovery of 2009. Several of our findings run strongly counter to established empirical regularities, in particular the high overall frequency of regular or reference price changes we uncover, the greater intensity of change in more turbulent times and the numerical dominance of price falls over rises. The pricing behaviour revealed also significantly challenges the implicit assumption that prices are tracking cost changes.

Suggested Citation

  • Seaton, Jonathan S. & Waterson, Michael, 2012. "Price flexibility in British supermarkets," Economic Research Papers 270631, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:270631
    DOI: 10.22004/ag.econ.270631
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    References listed on IDEAS

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    Cited by:

    1. Seaton, Jonathan S. & Waterson, Michael, 2013. "Identifying and characterising price leadership in British supermarkets," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 392-403.

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    More about this item

    Keywords

    Financial Economics;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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