Holiday Non-Price Rigidity and Cost of Adjustment

Georg Muler, Mark Bergen, Shantanu Dutta and Daniel Levy ()
Additional contact information
Georg Muler: Strategic Pricing Group
Mark Bergen: Carlson School of Management, University of Minnesota
Shantanu Dutta: Marshall School of Business, University of Southern California

No 2006-4, Working Papers from Bar-Ilan University, Department of Economics

Abstract: There has been increasing interest in understanding how firms undertake non-price adjustment activities, especially in situations where prices may be rigid despite changes in market conditions. Using scanner price data for over 4,500 different food products from a large US supermarket chain, we document periods of rigidity in product additions and deletions: new products are less likely to be introduced, and existing products are less likely to be discontinued during holiday periods than throughout the rest of the year. We argue that this is due to higher costs of undertaking these kinds of product assortment activities during holiday periods. We discuss how this relates to the exiting literature on non-price adjustment mechanisms, cost of price adjustment, and price rigidity.

Keywords: non-price adjustment mechanism; cost of adjustment; price rigidity; holiday; product assortment; product introduction; product deletion; sticky price; rigid price; menu cost (search for similar items in EconPapers)
JEL-codes: D21 L20 L81 M21 M31 (search for similar items in EconPapers)
Date: 2006-09
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Citations: View citations in EconPapers (1)

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Journal Article: Holiday Non-Price Rigidity and Cost of Adjustment (2007)
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