Do the Poor Pay More? An Empirical Investigation of Price Dispersion in Food Retailing

Lashawn Hayes
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Lashawn Hayes: Rutgers University

No 825, Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: On the question of whether prices are higher in poor, urban neighborhoods, the prior research is decidedly mixed. This paper revisits the question by analyzing unpublished price-level data collected by the Bureau of Labor Statistics for construction of the Consumer Price Index. Using this large, statistically representative sample of stores in poor and affluent neighborhoods, I first estimate if a price difference exists. I then empirically test the major arguments in support of disparate prices such as differences in quality, operating and consumer search costs. I also explore the relationship between pricing strategies and the racial and ethnic composition of poor neighborhoods. I find that market prices are up to 6 percent less in poor neighborhoods after controlling for a variety of covariates. In addition, I find that poor, predominantly white and Hispanic neighborhoods experience significant discounts, while market prices in poor, predominantly black neighborhoods are comparable to those in affluent white areas.

JEL-codes: L66 O50 Q11 (search for similar items in EconPapers)
Date: 2000-09
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:pri:indrel:446

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