Relative Price Dispersion: Evidence and Theory

Abstract

At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w21931.ack NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Price Dispersion When Stores Sell Multiple Goods

“…In this paper, I reviewed the work by Kaplan et al (2016). The paper studies price dispersion both empirically and theoretically in setting where …rms sell (and price) multiple goods.…”

“…It is interesting to contrast the type of price discrimination advanced in Kaplan et al (2016) with intertemporal price discrimination (see, e.g., Conlisk et al [1984] and Sobel [1984] or, in a search-theoretic context, Albrecht et al [2013] and Menzio and Trachter [2015b]). The key to intertemporal price discrimination is a negative correlation between a buyer's valuation and his ability to intertemporally substitute purchases.…”

“…One of these features is that most stores sell multiple goods, a feature that not only changes the measurement of search frictions, but also opens new avenues for theoretical research, given the scant availability of models of multiproduct pricing, i.e., models where …rms price multiple goods simultaneously. In this paper, I review the work of Kaplan et al (2016) (KMRT from now on), which is a recent study on the empirical properties of price dispersion in a multiproduct setting and provides a model to rationalize it.The views expressed in this article are those of the author and do not necessarily represent those of the Federal Reserve Bank of Richmond or the Federal Reserve System. …”

Equilibrium Price Dispersion Across and Within Stores

“…To formalize the above argument, consider an equilibrium in which the marginal price 5 Indeed, the results in Subsection 3.4 are used by Kaplan et al (2015) in the context of a model of multiproduct retailing. Lester et al (2015) develop similar arguments to solve for the equilibrium distribution of multiple screening contracts in the context of a model of the asset market.…”

Consumer Search and Retail Market Structure

“…The merger discussed in our paper is of the second type. 5 See also Baughman and Burdett (2015) and Kaplan et al (2015) for more recent work in this direction. The former shows that assuming no consumer recall can greatly simplify the analysis of multiproduct search with price dispersion.…”