Consumer Search and Price Dispersion in Supermarkets

Pierre Dubois and Helena Perrone

No 10906, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study consumer search and demand in French supermarkets using household-level scanner data. We document substantial price dispersion and frequent changes in stores’ positions in the price distribution, suggesting that consumers face imperfect information about current prices. We also show that household characteristics associated with time constraints and shopping costs are systematically related to prices paid and store visits. Motivated by this evidence, we estimate a structural model in which consumers search sequentially across stores and choose among differentiated coffee products within each sampled store. The results imply substantial informational frictions: many consumers purchase after observing few stores, weakening substitution across retailers. The full search model implies limited store-level substitution, with a share-weighted own-store elasticity of −0.396 and a share-weighted cross-store elasticity of 0.104. The estimates also imply a choice-utility loss from imperfect price information. Together, these results show that imperfect price information weakens competitive pressure across retailers and lowers the expected utility households obtain from their store choices.

Keywords: Demand estimation; Imperfect information; Price dispersion; Search costs; Retail markets (search for similar items in EconPapers)
JEL-codes: D4 D83 L11 L66 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-agr, nep-com, nep-ind and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Working Paper: Consumer Search and Price Dispersion in Supermarkets (2026)
Working Paper: Consumer Search and Price Dispersion in Supermarkets (2026)
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