How Mobil Stars Affect Restaurant Pricing Behavior.

The widely circulated Mobil Travel Guide rates restaurants on a scale of one to five stars. In a study spanning some two decades, the authors investigated whether changes in Mobil's ratings affected price changes in restaurants in four areas: Illinois, Massachusetts, Ontario, and Quebec. In general, restaurants that gained a Mobil star raised their prices more than those for which the rating was unchanged. An exception occurred in Ontario, where "unchanged" restaurants raised their prices in similar proportion to those that gained a star. Contrary to expectations, price changes by restaurants that lost a star were not substantially different from those that remained unchanged in the ratings, although the "demoted" restaurants raised the prices of certain menu items by a greater percentage than did unchanged restaurants. This effect was noted in all regions except Illinois, where price increases by demoted restaurants were smaller than unchanged restaurants. [ABSTRACT FROM PUBLISHER]