Arbeitspapier

Holiday Price Rigidity and Cost of Price Adjustment

Using unique retail and wholesale price data for 4,532 products carried by a major Mid-western grocery retailer, we find evidence of significant retail price rigidity during the Thanksgiving through Christmas holiday period relative to the rest of the year. We suggest that this pattern of holiday retail price rigidity is best explained by an increased opportunity cost of changing prices at these stores during the holiday period. Evidence based on discussions with retail managers suggests that during holidays the physical, managerial, and customer costs of changing prices rise considerably. Due to higher store traffic, performing tasks such as restocking shelves, handling customers’ questions and inquiries, running cash registers, cleaning, and bagging, become more urgent during holidays and thus receive priority. As a result, the holiday-period opportunity cost of price adjustment increases dramatically for the stores. The data provide a natural experimental setting to study variation in price rigidity because the products, stores, and surrounding institutional features and arrangements, including the market structure, the contractual arrangements, and the nature of relationships, etc., do not change between holiday and non-holiday weeks.

Sprache
Englisch

Erschienen in
Series: Working Paper ; No. 2002-03

Klassifikation
Wirtschaft
General Aggregative Models: Keynes; Keynesian; Post-Keynesian
Price Level; Inflation; Deflation
Thema
price rigidity
costs of price adjustment
holidays

Ereignis
Geistige Schöpfung
(wer)
Levy, Daniel
Müller, Georg
Dutta, Shantanu
Bergen, Mark
Ereignis
Veröffentlichung
(wer)
Bar-Ilan University, Department of Economics
(wo)
Ramat-Gan
(wann)
2002

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Levy, Daniel
  • Müller, Georg
  • Dutta, Shantanu
  • Bergen, Mark
  • Bar-Ilan University, Department of Economics

Entstanden

  • 2002

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