Multi-product pricing : theory and evidence from large retailers in Israel / by Marco Bonomo, Carlos Carvalho, Oleksiy Kryvtsov, Sigal Ribon and Rodolfo Rigato.: FB3-5/2020-12E-PDF
"Standard theories of price adjustment are based on the problem of a single-product firm, and therefore they may not be well suited to analyze price dynamics in the economy with multiproduct firms. To guide new theory, we study a unique dataset with comprehensive coverage of daily prices in large multi-product food retailers in Israel. We find that a typical retail store synchronizes its regular price changes around occasional "peak" days when, once or twice a month, it reprices around 10% of its products. To assess the implications of partial price synchronization for inflation dynamics, we develop a new price-setting model in which a firm sells a continuum of products and faces economies of scope in price adjustment. The model generates the partial synchronization pattern with peaks of re-pricing activity observed in the data. We show analytically and numerically that synchronization of price changes attenuates the average price response to a monetary shock; however, only high degrees of synchronization can materially strengthen monetary non-neutrality. Hence, the synchronization of price changes observed in the data is consistent with considerable aggregate price flexibility"--Abstract, page iii.
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publications.gc.ca/pub?id=9.886402&sl=0
| Department/Agency | Bank of Canada. |
|---|---|
| Title | Multi-product pricing : theory and evidence from large retailers in Israel / by Marco Bonomo, Carlos Carvalho, Oleksiy Kryvtsov, Sigal Ribon and Rodolfo Rigato. |
| Series title | Staff working paper = Document de travail du personnel, 1701-9397 ; 2020-12 |
| Publication type | Series - View Master Record |
| Language | [English] |
| Format | Electronic |
| Electronic document | |
| Note(s) | "Last updated: April 7, 2020." Includes bibliographical references (pages 36-39). Includes abstracts in English and French. |
| Publishing information | Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2020. ©2020 |
| Author / Contributor | Bonomo, Marco, author. |
| Description | 1 online resource (iv, 58 pages) : colour illustrations. |
| Catalogue number |
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| Subject terms | Groceries -- Prices -- Israel -- Econometric models. Pricing -- Econometric models. Inflation (Finance) -- Econometric models. Transmission mechanism (Monetary policy) -- Econometric models. Épicerie (Denrées) -- Prix -- Israël -- Modèles économétriques. Prix -- Fixation -- Modèles économétriques. Inflation -- Modèles économétriques. Mécanismes de transmission (Politique monétaire) -- Modèles économétriques. |
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