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The Effects of Mandatory Disclosure of Supermarket Prices

Itai Ater and Oren Rigbi

No 12381, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study how mandatory online disclosure of supermarket prices affects prices and price dispersion in brick-and-mortar stores. Using data collected before and after a transparency regulation went into effect in the Israeli food retail market, multiple complementary control groups and relying on a differences-in-differences research design, we document a sharp decline in price dispersion and a 4% to 5% drop in prices following the transparency regulation. The price drop varied across stores and products; it was smaller among branded products than among private-label products, and it was smaller among stores and products that were likely to have been associated with more intense search patterns even before prices became transparent (e.g., products in heavy-discount chains; popular products; products that meet stringent kosher requirements). Finally, we show that prices declined as more consumers used price-comparison websites, and we highlight the role of media coverage in encouraging retailers to set lower prices.

Keywords: Price Transparency; Information; Mandatory Disclosure; Retail Food; Supermarkets (search for similar items in EconPapers)
JEL-codes: D83 L66 L81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-com and nep-mkt
Date: 2017-10
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