Pricing Regimes in Disaggregated Data
No 1389, 2011 Meeting Papers from Society for Economic Dynamics
This paper develops a test for changes in the distribution of good-level prices over time and applies it to grocery store data. The method is based on the Kolmogorov-Smirnov statistic, which measures the distance between two empirical distributions. This test is robust to different data generating processes and does not require specific a priori knowledge about patterns in the data. I find that the typical pricing regime lasts seven months yet consists of a small number of distinct prices: for the large majority of regimes, five or fewer unique prices account for more than 90% of the regime. The test provides a natural way to investigate the prevalence of sticky pricing plans, since the identified change points serve as estimates of transitions to new plans. I find strong evidence in favor of rigid pricing plans: in addition to rigidity of the modal price of each regime, 76% of product series exhibit some degree of within-regime rigidity among non-modal prices; conversely, only 18% of series consist entirely of one-to-flex regimes in which prices flexibly deviate from the rigid mode; the remaining 5% consist of single sticky price regimes.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:red:sed011:1389
Access Statistics for this paper
More papers in 2011 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().