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Everyday Regular Prices

Nicoletta Berardi, Federico Ravenna and Mario Samano

Working papers from Banque de France

Abstract: Using a novel dataset from a large supermarket retailer in a European country that never engages in temporary sales, we establish that prices are actually as sticky as regular prices. Circumventing the debate on whether sales have to be included or excluded from price adjustments, we find evidence consistent with state-dependent price setting in a multiproduct firm. In particular, our data exhibit responsiveness of prices to changes to aggregate demand shifts, a more than trivial share of very small price changes, synchronization of price changes across items especially within the same product category. Price rigidity and the extent of state-dependence is heterogeneous across items. In particular, we find that pricing of top sales items (and even more of private label ones) is more flexible and state-dependent, which is consistent with price setting in a multiproduct firm characterized by rational inattention.

Keywords: : Price Setting; Multiproduct Firm; State-Dependence; Synchronization; Rational Inattention; Sales Price; Regular Price. (search for similar items in EconPapers)
JEL-codes: D22 E31 E32 E4 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2020
New Economics Papers: this item is included in nep-com, nep-ind and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:746

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