Holiday Nonprice Rigidity and Cost of Adjustment
There has been increasing interest in understanding how firms undertake nonprice adjustment activities, especially in situations where prices may be rigid despite changes in market conditions. Using scanner price data for over 4,500 different food products from a large U.S. supermarket chain, we document periods of rigidity in product additions and deletions: new products are less likely to be introduced, and existing products are less likely to be discontinued during holiday periods than throughout the rest of the year. We argue that this is due to higher costs of undertaking these kinds of product assortment activities during holiday periods. We discuss how this relates to the exiting literature on nonprice adjustment and price rigidity.
Year of publication: |
2006-09
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Authors: | Mueller, Georg ; Bergen, Mark ; Dutta, Shantanu ; Levy, Daniel |
Institutions: | Department of Economics, Emory University |
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