The Effects of Mandatory Disclosure of Supermarket Prices

48 Pages Posted: 23 Oct 2017  

Itai Ater

Tel Aviv University - Coller School of Management

Oren Rigbi

Ben-Gurion University of the Negev

Multiple version iconThere are 2 versions of this paper

Date Written: October 2017

Abstract

We study how mandatory online disclosure of supermarket prices affects prices and price dispersion in brick-and-mortar stores. Using data collected before and after a transparency regulation went into effect in the Israeli food retail market, multiple complementary control groups and relying on a differences-in-differences research design, we document a sharp decline in price dispersion and a 4% to 5% drop in prices following the transparency regulation. The price drop varied across stores and products; it was smaller among branded products than among private-label products, and it was smaller among stores and products that were likely to have been associated with more intense search patterns even before prices became transparent (e.g., products in heavy-discount chains; popular products; products that meet stringent kosher requirements). Finally, we show that prices declined as more consumers used price-comparison websites, and we highlight the role of media coverage in encouraging retailers to set lower prices.

Keywords: Price Transparency; Information; Mandatory Disclosure; Retail Food; Supermarkets

JEL Classification: D83, L66, L81

Suggested Citation

Ater, Itai and Rigbi, Oren, The Effects of Mandatory Disclosure of Supermarket Prices (October 2017). CEPR Discussion Paper No. DP12381. Available at SSRN: https://ssrn.com/abstract=3057295

Itai Ater (Contact Author)

Tel Aviv University - Coller School of Management ( email )

Tel Aviv
Israel

Oren Rigbi

Ben-Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheba 84105, 84105
Israel

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