Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/206762
Authors: 
Levy, Daniel
Bergen, Mark
Dutta, Shantanu
Venable, Robert
Year of Publication: 
1997
Citation: 
[Journal:] Quarterly Journal of Economics [ISSN:] 1531-4650 [Volume:] 112 [Issue:] 3 [Pages:] 791–824
Abstract: 
We use store-level data to document the exact process of changing prices and to directly measure menu costs at five multistore supermarket chains. We show that changing prices in these establishments is a complex process, requiring dozens of steps and a nontrivial amount of resources. The menu costs average $105,887/year per store, comprising 0.70 percent of revenues, 35.2 percent of net margins, and $0.52/price change. These menu costs may be forming a barrier to price changes. Specifically, (1) a supermarket chain facing higher menu costs (due to item pricing laws that require a separate price tag on each item) changes prices two and one-half times less frequently than the other four chains; (2) within this chain the prices of products exempt from the law are changed over three times more frequently than the products subject to the law.
Subjects: 
Menu Cost
Posted Prices
Multiproduct Retailer
Price Rigidity
Sticky Prices
Rigid Prices
Cost of Price Adjustment
New Keynesian Economics
Time Dependent Pricing
JEL: 
E12
E31
Published Version’s DOI: 
Document Type: 
Article
Document Version: 
Accepted Manuscript (Postprint)

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