Informational Rigidities and the Stickiness of Temporary Sales
Name
Simester_Informational rigidities.pdf
Description
Submitted version
Size
500.03 KB
Format
Adobe PDF
Checksum (MD5)
0ae2a7ded3981819e41448d2279c15a6
Author(s)
Anderson, Eric
Malin, Benjamin A.
Nakamura, Emi
Simester, Duncan
Steinsson, Jon
Date Issued
October 2017
Journal
Journal of Monetary Economics
Publisher
Elsevier BV
Citation
Anderson, Eric et al. "Informational Rigidities and the Stickiness of Temporary Sales." Journal of Monetary Economics 90 (October 2017): 64-83 © 2017 Elsevier B.V.
Version
Original manuscript
Abstract
How do retailers react to cost changes? While temporary sales account for 95% of price change in our data, retail prices respond to a wholesale cost increase entirely through the regular price. Sales actually respond temporarily in the opposite direction from regular prices, as though to conceal the price hike. Additional evidence from responses to commodity cost and local unemployment shocks, as well as broader evidence from BLS data, reinforces these findings. Institutional evidence indicates that sales are complex contingent contracts, determined substantially in advance. In a standard price-discrimination model, these institutional practices leave little money ``on the table”.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Sloan School of Management
Terms of Use
Creative Commons Attribution-NonCommercial-NoDerivs License
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1016/J.JMONECO.2017.06.003
