Small Price Responses to Large Demand Shocks

López-Salido, J David and Etienne Gagnon
Authors registered in the RePEc Author Service: J. David Lopez-Salido

No 10725, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the pricing response of U.S. supermarkets to large demand shocks triggered by labor conflicts, mass population relocation, and shopping sprees around major snowstorms and hurricanes. We find that these large swings in demand have, at best, modest effects on the level of retail prices, consistent with flat short- to medium-term supply curves. This finding holds even when shocks are highly persistent and even though stores adjust prices frequently. We also uncover evidence that retailers with radically different demand shocks nonetheless seek to match their local competitors' pricing movements and recourse to sales and promotions.

Keywords: Demand shocks; inflation; Labor conflicts; Mass population displacement; Sales; Severe weather events (search for similar items in EconPapers)
JEL-codes: E30 L11 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Small Price Responses to Large Demand Shocks (2020)
Working Paper: Small Price Responses to Large Demand Shocks (2015)
Working Paper: Small Price Responses to Large Demand Shocks (2014)
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