Why Does the Average Price of Tuna Fall During Lent?

Aviv Nevo and Konstantinos Hatzitaskos

No 11572, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: For many products the average price paid by consumers falls during periods of high demand. We use information from a large supermarket chain to decompose the decrease in the average price into a substitution effect, due to an increase in the share of cheaper products, and a price reduction effect. We find that for almost all the products we study the substitution effect explains a large part of the decrease. We estimate demand for these products and show the price declines are consistent with a change in demand elasticity and the relative demand for different brands. Our findings are less consistent with "loss-leader" models of retail competition.

Date: 2005-08
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