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http://hdl.handle.net/10419/38662
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| Title: | | Why does the average price paid fall during high demand periods?  |
| Authors: | | Nevo, Aviv Hatzitaskos, Konstantinos |
| Issue Date: | | 2006 |
| Series/Report no.: | | CSIO working paper 0086 |
| Abstract: | | For many products the average price paid by consumers falls during periods of high demand. We use information from a large supermarket chain to decompose the decrease in the average price into a substitution effect, due to an increase in the share of cheaper products, and a price reduction effect. We find that for almost all the products we study the substitution effect explains a large part of the decrease. We estimate demand for these products and show the price declines are consistent with a change in demand elasticity and the relative demand for different brands. Our findings suggest, that for the data we examine, loss-leader models of retail competition are not the main explanation for price declines. |
| Document Type: | | Working Paper |
| Appears in Collections: | | CSIO Electronic Working Papers, Northwestern University
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