The Magnitude of Menu Costs: Direct Evidence from Large U.S. Supermarket Chains

Artikel

We use store-level data to document the exact process of changing prices and to directly measure menu costs at five multistore supermarket chains. We show that changing prices in these establishments is a complex process, requiring dozens of steps and a nontrivial amount of resources. The menu costs average $105,887/year per store, comprising 0.70 percent of revenues, 35.2 percent of net margins, and $0.52/price change. These menu costs may be forming a barrier to price changes. Specifically, (1) a supermarket chain facing higher menu costs (due to item pricing laws that require a separate price tag on each item) changes prices two and one-half times less frequently than the other four chains; (2) within this chain the prices of products exempt from the law are changed over three times more frequently than the products subject to the law.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Quarterly Journal of Economics ; ISSN: 1531-4650 ; Volume: 112 ; Year: 1997 ; Issue: 3 ; Pages: 791–824- ; Oxford: Oxford University Press

Classification and Topics

• Classification: Wirtschaft ; General Aggregative Models: Keynes; Keynesian; Post-Keynesian ; Price Level; Inflation; Deflation
• Subject: Menu Cost ; Posted Prices ; Multiproduct Retailer ; Price Rigidity ; Sticky Prices ; Rigid Prices ; Cost of Price Adjustment ; New Keynesian Economics ; Time Dependent Pricing

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Levy, Daniel ; Bergen, Mark ; Dutta, Shantanu ; Venable, Robert
• Event: Veröffentlichung
• (who): Oxford University Press ; ZBW – Leibniz Information Centre for Economics
• (where): Oxford
• (when): 1997

Further information

• DOI: doi:10.1162/003355397555352
• Handle: http://hdl.handle.net/10419/206762
• Last update: 10.03.2025, 11:42 AM CET