Competition, business cycles, and price flexibility in grocery stores

Philip Glandon and Matthew Jaremski

Economics Letters, 2019, vol. 181, issue C, 137-139

Abstract: We study how local competition affects price flexibility over the business cycle using a nationally representative US scanner database covering 2001 to 2011. We find that the entry of a grocery store has no significant effect on the frequency of price change at incumbent grocers in the same zip code, but the entry of a Walmart results in more frequent price changes. Looking across time, price change frequency increases during expansions and decreases during downturns; however, all else being equal, the presence of a Walmart mitigates much of this cyclical behavior, compared to other grocery store competitors that have no differential effect across the business cycle.

Keywords: Price competition; Price flexibility; Sales prices; Walmart; Business cycles (search for similar items in EconPapers)
JEL-codes: E30 L11 L13 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:181:y:2019:i:c:p:137-139

DOI: 10.1016/j.econlet.2019.05.020

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