Abstract

http://ssrn.com/abstract=137584
 
 

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Menu Costs, Posted Prices, and Multiproduct Retailers


Shantanu Dutta


University of Southern California - Marshall School of Business

Mark E. Bergen


University of Minnesota - Carlson School of Management

Daniel Levy


Bar-Ilan University - Department of Economics; Emory University - Department of Economics; Rimini Center for Economic Analysis

Robert Venable


Robert W. Baird & Co. Incorporated


Journal of Money, Credit, and Banking, Vol. 31, No. 4, pp. 683-703, November 1999

Abstract:     
We use a unique store-level data set to directly measure menu costs and to study the price change process at a large U.S. drugstore chain. We compare and contrast the magnitude of these measures with similar measures from 4 large U.S. supermarket chains. We find that (1) the actual magnitude of menu costs as a share of revenues, (2) menu costs per price change, (3) the frequent use of promotional pricing, and (4) the use of weekly pricing rules, are similar across both retail formats. Given that the main common features of these two types of retail formats are that (i) they both use posted prices, and (ii) both are multiproduct retailers selling a large number of products, our findings suggest that the magnitude of the menu cost components we measure, and the price change practices we document, may be generalizable across retail formats with these two features.

Keywords: Menu Cost, Posted Prices, Multiproduct Retailers, Time Dependent Pricing

JEL Classification: E12, E31

Accepted Paper Series


Not Available For Download

Date posted: November 12, 1998  

Suggested Citation

Dutta, Shantanu and Bergen, Mark E. and Levy, Daniel and Venable, Robert, Menu Costs, Posted Prices, and Multiproduct Retailers. Journal of Money, Credit, and Banking, Vol. 31, No. 4, pp. 683-703, November 1999. Available at SSRN: http://ssrn.com/abstract=137584

Contact Information

Shantanu Dutta
University of Southern California - Marshall School of Business ( email )
Hoffman Hall 701
Los Angeles, CA 90089-1427
United States
213-740-5038 (Phone)
213-740-7828 (Fax)
Mark E. Bergen
University of Minnesota - Carlson School of Management ( email )
19th Avenue South
Minneapolis, MN 55455
United States
612-624-1821 (Phone)
Daniel Levy (Contact Author)
Bar-Ilan University - Department of Economics ( email )
Ramat-Gan, 5290002
Israel
+972 3 531-8345 (Phone)
+972 3 738-4034 (Fax)
HOME PAGE: http://econ.biu.ac.il/en/levy

Emory University - Department of Economics ( email )
1602 Fishburne Drive, Suite 306
Rich Building
Atlanta, GA 30322-0001
United States
HOME PAGE: http://economics.emory.edu/home/people/faculty/Levydaniel.html
Rimini Center for Economic Analysis ( email )
Via Patara, 3
Rimini (RN), RN 47900
Italy
HOME PAGE: http://www.rcfea.org/
Robert Venable
Robert W. Baird & Co. Incorporated ( email )
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