PRICE FLEXIBILITY IN BRITISH SUPERMARKETS: MODERATION AND RECESSION

Huw Dixon, Jonathan Seaton and Michael Waterson
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Jonathan Seaton: Loughborough University

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper delivers a significantly different empirical perspective on micro pricing behaviour and its impact on macroeconomic processes than previous studies, largely resulting from the fact that our weekly price data for the three major British supermarkets spans a seven year period including the crisis years 2008-2010. We find that there is a large and significant change in the behaviour of prices from 2008 onwards: prices change more frequently and the average duration of price spells declines significantly. 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. JEL classification: E30 ; E31 ; L81

Keywords: Micro pricing; price flexibility; regular prices; menu costs (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-agr, nep-com, nep-eur, nep-hme and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: PRICE FLEXIBILITY IN BRITISH SUPERMARKETS: MODERATION AND RECESSION (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:1041

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