1. Menu Costs, Posted Prices, and Multiproduct Retailers
- Author
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Suchandra Dutta, Daniel Levy, Robert Venable, Mark Bergen, FBE, Marshall School of Business, University of Southern California (USC), Carlson School of Management, University of Minnesota [Twin Cities] (UMN), University of Minnesota System-University of Minnesota System, Rimini Center for Economic Analysis (RCEA), Emory University [Atlanta, GA], and Bar-Ilan University [Israël]
- Subjects
Sticky Prices ,Economics and Econometrics ,Multiproduct Retailers ,[SHS]Humanities and Social Sciences ,Posted Prices ,Microeconomics ,Menu Cost ,Accounting ,0502 economics and business ,ddc:330 ,Economics ,Revenue ,E12 ,050207 economics ,Menu Cost, Posted Prices, Multiproduct Retailer, Price Rigidity, Sticky Prices, Cost of Price Adjustment, Time Dependent Pricing ,E31 ,ComputingMilieux_MISCELLANEOUS ,Measure (data warehouse) ,050208 finance ,05 social sciences ,Cost of Price Adjustment ,jel:E31 ,Menu cost ,[SHS.ECO]Humanities and Social Sciences/Economics and Finance ,A share ,jel:E12 ,Frequent use ,Price change ,Time-Dependent Pricing ,Nominal Price Rigidity ,Finance - Abstract
We use a unique store-level data set to directly measure menu costs and to study the price change process at a large U.S. drugstore chain. We compare and contrast the magnitude of these measures with similar measures from 4 large U.S. supermarket chains. We find that (1) the actual magnitude of menu costs as a share of revenues, (2) menu costs per price change, (3) the frequent use of promotional pricing, and (4) the use of weekly pricing rules, are similar across both retail formats. Given that the main common features of these two types of retail formats are that (i) they both use posted prices, and (ii) both are multiproduct retailers selling a large number of products, our findings suggest that the magnitude of the menu cost components we measure, and the price change practices we document, may be generalizable across retail formats with these two features.
- Published
- 1999
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