Store expensiveness and consumer saving: Insights from a new decomposition of price dispersion

Sofronis Clerides, Pascal Courty and Yupei Ma

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

Abstract: We build on recent work analyzing consumers' ability to save by exploiting price dispersion in grocery stores. We show that store expensiveness is not universal but varies across consumers depending on the basket they consume. We incorporate this insight into a decomposition of price variance that is a refinement of Kaplan and Menzio's (2015) approach. Our analysis finds that the ability to choose the right product at the right store is much less important than Kaplan and Menzio found; rather, the ability to choose the cheapest stores for one's basket is the main source of variance in consumer savings.

Keywords: Price dispersion; grocery shopping; consumer saving; store expensiveness (search for similar items in EconPapers)
JEL-codes: D12 D14 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2020-03
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https://papers.econ.ucy.ac.cy/RePEc/papers/02-20.pdf (application/pdf)

Related works:
Journal Article: Store expensiveness and consumer saving: Insights from a new decomposition of price dispersion (2023)
Working Paper: Store expensiveness and consumer saving: Insights from a new decomposition of price dispersion (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:02-2020

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