Small Price Changes, Sales Volume, and Menu Cost

Doron Sayag, Avichai Snir and Daniel Levy ()

MPRA Paper from University Library of Munich, Germany

Abstract: The finding of small price changes in many retail price datasets is often viewed as a puzzle. We show that a possible explanation for the presence of small price changes is related to sales volume, an observation that has been overlooked in the existing literature. Analyzing a large retail scanner price dataset that contains information on both prices and sales volume, we find that small price changes are more frequent when products’ sales volume is high. This finding holds across product categories, within product categories, and for individual products. It is also robust to various sensitivity analyses such as measurement errors, the definition of “small” price changes, the inclusion of measures of price synchronization, the size of producers, the time horizon used to compute the average sales volume, the revenues, the competition, shoppers’ characteristics, etc.

Keywords: Menu cost; (S, s) band; price rigidity; sticky prices; small price changes; small price adjustments; sales volume (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 E58 L16 L2 L20 L81 M10 M21 M31 (search for similar items in EconPapers)
Date: 2024-02-28
New Economics Papers: this item is included in nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/120419/1/MPRA_paper_120419.pdf original version (application/pdf)

Related works:
Working Paper: Small Price Changes, Sales Volume, and Menu Cost (2024)
Working Paper: Small Price Changes, Sales Volume, and Menu Cost (2024)
Working Paper: Small Price Changes, Sales Volume, and Menu Cost (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:120419

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().