Price Dispersion and the Role of Stores
32 Pages Posted: 14 Aug 2017 Last revised: 15 Aug 2017
Date Written: August 9, 2017
This paper studies price dispersion in the Norwegian retail market for 766 products across 4 297 stores over 60 months. Price dispersion for homogeneous products is significant and persistent, with a coefficient of variation of 37% for the median product. Price dispersion differs between product categories and over time. Store heterogeneity accounts for 30% of the observed variation in prices for the median product-month and for around 50% for the sample as a whole. Price dispersion is still prevalent after correcting for store heterogeneity.
Keywords: Price dispersion, retail prices, store heterogeneity
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