Price dispersion and informational frictions: Evidence from Supermarkets Purchases∗
نویسندگان
چکیده
Traditional demand models assume consumers are perfectly informed about product characteristics, including price. However, sales are a common supermarket practice. Using French data we show that retailers frequently change position in the price rankings, making it unlikely that consumers know all deals offered at each period. Further empirical evidence relating transaction prices, consumers’opportunity cost of time, and store visits is consistent with a model of imperfectly informed consumers that have to pay a cost to find out about prices. We develop such a model for horizontally differentiated products and structurally estimate the search cost distribution. Results show that in equilibrium consumers observe a very limited number of prices before making a purchase decision, implying that informational frictions are important and that local market power is potentially high. We also show that a demand model that assumes perfect information underestimates price elasticities.
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تاریخ انتشار 2015