The Effects of Mandatory Disclosure of Supermarket Prices

61 Pages Posted: 22 May 2018

See all articles by Itai Ater

Itai Ater

Tel Aviv University - The Leon Recanati Graduate School of Business Administration

Oren Rigbi

Ben-Gurion University of the Negev

Date Written: March 21, 2018

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 private-label products than among branded 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: D830, L810, L660

Suggested Citation

Ater, Itai and Rigbi, Oren, The Effects of Mandatory Disclosure of Supermarket Prices (March 21, 2018). CESifo Working Paper Series No. 6942. Available at SSRN: https://ssrn.com/abstract=3178561

Itai Ater

Tel Aviv University - The Leon Recanati Graduate School of Business Administration ( email )

P.O. Box 39010
Ramat Aviv Tel Aviv 69972, 69978
Israel

Oren Rigbi (Contact Author)

Ben-Gurion University of the Negev ( email )

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

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