Friday, August 11, 2017
Nicoletta Berardi, Banque de France - Economic Study and Research Division, Patrick Sevestre, Aix-Marseille University and Jonathan Thebault analyze The Determinants of Consumer Price Dispersion: Evidence from French Supermarkets.
ABSTRACT: We characterize the dispersion of grocery prices in France based on a large original data set of prices in more than 1500 supermarkets. On average across products, the 90th percentile of relative prices is 17 percentage points higher than the 10th and the mean absolute deviation from quarterly average product prices is 5%. We show that temporal price variations (including sales and promotions) explain only little of the observed price dispersion, while the spatial permanent component of price dispersion largely dominates. Price dispersion across stores in France essentially results from persistent heterogeneity in retail chains' pricing, while local conditions regarding demand or competition contribute to a much lower extent.