Please use this identifier to cite or link to this item:
Levy, Daniel
Bergen, Mark
Dutta, Shantanu
Venable, Robert
Year of Publication: 
[Journal:] Quarterly Journal of Economics [ISSN:] 1531-4650 [Volume:] 112 [Issue:] 3 [Pages:] 791–824
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.
Menu Cost
Posted Prices
Multiproduct Retailer
Price Rigidity
Sticky Prices
Rigid Prices
Cost of Price Adjustment
New Keynesian Economics
Time Dependent Pricing
Published Version’s DOI: 
Document Type: 
Document Version: 
Accepted Manuscript (Postprint)

Files in This Item:

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.