Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/285116 
Year of Publication: 
2024
Publisher: 
ZBW - Leibniz Information Centre for Economics, Kiel, Hamburg
Abstract: 
The finding of small price changes in many retail price datasets is often viewed as a puzzle. We show that a possible explanation for the presence of small price changes is related to sales volume, an observation that has been overlooked in the existing literature. Analyzing a large retail scanner price dataset that contains information on both prices and sales volume, we find that small price changes are more frequent when products’ sales volume is high. This finding holds across product categories, within product categories, and for individual products. It is also robust to various sensitivity analyses such as measurement errors, the definition of “small” price changes, the inclusion of measures of price synchronization, the size of producers, the time horizon used to compute the average sales volume, the revenues, the competition, shoppers’ characteristics, etc.
Subjects: 
Menu Cost
(S, s) Band
Price Rigidity
Sticky Prices
Small Price Changes
Small Price Adjustments
Sales Volume
JEL: 
E31
E32
L16
L81
M31
M1
Document Type: 
Working Paper

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