Asymmetric price adjustment: evidence from weekly product‐level scanner price data

Abstract

Abstract We investigate asymmetric price responses by considering a unique, highly disaggregate retailer‐ and product‐level time series at a major supermarket chain. We find asymmetry exists, but is limited in scope and there is no evidence of a pervasive chain wide asymmetric pricing strategy. To explain product level variation, we borrow from both economic and marketing perspectives to suggest menu costs, operational efficiency, competition, and consumer perceptions as important factors. The evidence suggests an efficiency‐based rationale for asymmetry. This study complements that of Peltzman (2000. J. Polit. Econ. 108(3): 466–502.) who found no systematic asymmetry in a study of the same data considered at a more aggregate level. Copyright © 2007 John Wiley & Sons, Ltd.

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