Multi-Product Pricing: Theory and Evidence from Large Retailers
In: The economic journal: the journal of the Royal Economic Society, Band 133, Heft 651, S. 905-927
ISSN: 1468-0297
Abstract
We study a unique dataset with comprehensive coverage of daily prices in large multi-product retailers in Israel. Retail stores synchronise price changes around occasional 'peak' days when they reprice around 10% of their products. To assess aggregate implications of partial price synchronisation, we develop a new model in which multi-product firms face economies of scope in price adjustment, and synchronisation is endogenous. Synchronisation of price changes attenuates the average price response to monetary shocks, but only high degrees of synchronisation can substantially strengthen the real effects of monetary policy shocks. Our calibrated model generates real effects similar in magnitude to those in M. Golosov, and R.E. Lucas, Journal of Political Economy (2007), vol. 115, pp. 171–99.