Small Price Changes, Sales Volume, and Menu Cost

Arbeitspapier

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.

Object Details

• Language: Englisch

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Business Fluctuations; Cycles ; Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices ; Retail and Wholesale Trade; e-Commerce ; Marketing
• Subject: Menu Cost ; (S, s) Band ; Price Rigidity ; Sticky Prices ; Small Price Changes ; Small Price Adjustments ; Sales Volume

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Sayag, Doron ; Snir, Avichai ; Levy, Daniel
• Event: Veröffentlichung
• (who): ZBW - Leibniz Information Centre for Economics
• (where): Kiel, Hamburg
• (when): 2024

Further information

• Handle: http://hdl.handle.net/10419/285116
• Last update: 10.03.2025, 11:42 AM CET