Staggering and Synchronization in Price-Setting: Evidence from Multiproduct Firms

AMERICAN ECONOMIC REVIEW, Vol. 86, No. 5, December 1996

Posted: 24 Feb 1997  

Saul Lach

Hebrew University of Jerusalem - Department of Economics; CEPR

Daniel Tsiddon

Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER)

Abstract

Theoretical work on price-setting behavior focuses on the single-product case while, in reality, a single price-setter sells many products. We use retail store-level multiproduct pricing data to learn about price dynamics. We find that, while the timing of a product's price changes is staggered across stores selling the same product, the timing of the price changes of different products sold within the same store is highly synchronized. This finding validates the usual assumption that decisions are staggered across price-setters and suggests that price rigidity is due mostly to "mechanical" reasons and not to informational asymmetries.

JEL Classification: E10, E31, E52

Suggested Citation

Lach, Saul and Tsiddon, Daniel, Staggering and Synchronization in Price-Setting: Evidence from Multiproduct Firms. AMERICAN ECONOMIC REVIEW, Vol. 86, No. 5, December 1996. Available at SSRN: https://ssrn.com/abstract=3751

Saul Lach (Contact Author)

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel
+972 2 588 3253 (Phone)
+972 2 581 6071 (Fax)

HOME PAGE: http://economics.huji.ac.il/facultye/saul/saul.html

CEPR

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Daniel Tsiddon

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel
(972 3) 640 9218 (Phone)
(972 3) 640 9908 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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