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Author: René Böheim
Publisher:
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Languages : en
Pages :
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We analyze price dispersion using panel data from a large price comparison site. We use past pricing behavior to instrument for potential endogeneity that might result from the selection of firms to certain product markets. We find that greater price adjustment costs result in greater price dispersion. Although the impact of price adjustment costs on price dispersion became weaker over time, the causal effect of price adjustment costs on price dispersion is still present at the end of the period. Our results are robust to many alternative empirical specifications. We also test a range of alternative explanations of price dispersion, such as search cost, service differentiation, obfuscation, vertical restraints, and market structure.
Author: René Böheim
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
We analyze price dispersion using panel data from a large price comparison site. We use past pricing behavior to instrument for potential endogeneity that might result from the selection of firms to certain product markets. We find that greater price adjustment costs result in greater price dispersion. Although the impact of price adjustment costs on price dispersion became weaker over time, the causal effect of price adjustment costs on price dispersion is still present at the end of the period. Our results are robust to many alternative empirical specifications. We also test a range of alternative explanations of price dispersion, such as search cost, service differentiation, obfuscation, vertical restraints, and market structure.
Author: Tomasz Galewski
Publisher:
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Languages : en
Pages :
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Until recently, Internet was considered as technology that will make the trade in goods frictionless. Online retailers' margins were to fall to zero and prices - according to theory of economics - were to equalize as a result of buyers comparing prices more easily (e.g. using shop bots). Empirical research performed so far has not proven these expectations right. Studies in many countries show that online prices vary significantly (sometimes price dispersion in the Internet is higher than that in traditional trade). The purpose of this article is to present a critical view on the methods of measuring price dispersion in e-commerce. Researchers of this area use different measures of price differentials, include shipping costs or not, use the proposed price or try to determine transaction prices, reject part of the data considered as outliers that may indicate a hidden heterogeneity of a product. Some scientists also try to justify price dispersion with the reputation of a vendor, and also additional features of the sellers such as the amount of information presented in the offer, convenience of shopping, userfriendly interface, etc. All these factors are problematic for the research due to lack of a clear (and proper) way of measuring the mentioned attributes. Most of the previous studies also ignored the pricing strategy of vendors, which is a very important factor for price dispersion - it may involve reduction in prices of several products in order to attract customers to the store to buy other products with a much higher margin.
Author: Viacheslav Sheremirov
Publisher:
ISBN:
Category :
Languages : en
Pages : 154
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Book Description
A pivotal question in macroeconomics is how output, employment, and price level react to monetary, fiscal, and productivity shocks, both in business-cycle models and in the data. Sticky prices are often considered as one of the key amplification and propagation mechanisms for such shocks. However, there is still a widespread debate how sticky prices are and why they are sticky. This dissertation sheds a new light on this question. Chapter 1 relies on a relatively understudied measure of price stickiness--cross-sectional dispersion of prices--to distinguish between different models of price rigidity, while Chapter 2 measures price stickiness in online markets. With e-commerce becoming a significantly larger sector of the economy, this is one of the first attempts to understand pricing in online markets from data comparable to those used for brick-and-mortar stores. Since different business-cycle models make conflicting predictions about effects of demand shocks, in Chapter 3 I approach this question empirically by estimating the size of fiscal multipliers from military spending data. Such empirical estimates may help researchers and policymakers to distinguish between various models. In macroeconomic models, the level of price dispersion, which is typically approximated using its relationship with inflation, is a central determinant of welfare, the cost of business cycles, the optimal rate of inflation, and the trade-off between inflation and output stability. While the comovement of price dispersion and inflation implied by standard models is positive, in this dissertation I show that it is actually negative in the data. Chapter 1 shows that sales play a pivotal role: i) if sales are removed from the data, the comovement of price dispersion and inflation turns positive; ii) models in which price dispersion is due to price rigidity cannot quantitatively match the comovement even for regular prices; iii) the Calvo model with sales can quantitatively match both the negative comovement found in the data and the positive comovement for regular prices. Finally, I show that models that fail to match the degree of comovement in the data can significantly mismeasure welfare and its determinants. Chapter 2 focuses on price-setting practices in online markets examined through the lens of a novel dataset on price listings and the number of clicks from the Google Shopping Platform. This unique dataset contains information on price quotes and the number of clicks at the daily frequency for a broad variety of consumer goods and sellers in the US and UK over the period of nearly two years. This chapter provides estimates of the frequency of price adjustment, price synchronization across sellers and goods, as well as the distribution of the sizes of price changes. It compares the estimates for the case when information on quantity margin is observed--as in the scanner data from brick-and-mortar stores--with the case when it is not, which is typical in the literature on online prices. It concludes that many internet prices that do not change often obtain very few clicks. The key findings are the following: First, despite the cost of price change being negligible, prices appear relatively sticky. Second, if the quantity margin is accounted for, prices are much more flexible. It remains a question why low-demand sellers do not adjust their prices often, yet maintain costly price listings on the platform. Third, in spite of low costs of monitoring competitors' prices and high benefits from doing so--since search costs for consumers are low too--there is little price synchronization across sellers. Fourth, the distribution of the sizes of price changes is characterized by a non-trivial mass around zero, which is inconsistent with the state-dependent models with fixed menu costs, but favors time-dependent models of price adjustment. Hence, online prices change infrequently, by a large amount, and are not synchronized across sellers. In Chapter 3, I use a multi-country dataset on disaggregated military spending to document the effect of government expenditure by sector on aggregate output. The data obtained from multiple sources including UN, NATO, and the Stockholm International Peace Research Institute (SIPRI) allow to systematically break down total military expenditure into that on durables versus nondurables and services for 69 countries within 1950-1997 period. I show that the spending multiplier is larger when government spends on durables rather than on nondurables or services, which could be due to differences in price flexibility, intertemporal elasticity of substitution, or some other sectoral factors. Although the estimates suffer from the lack of precision, the finding is robust across data sources and groups of countries. Quantitatively, the durables multiplier could be up to four times as high as that for nondurables and services. I use the dataset to estimate the standard spending multiplier as a litmus test, which results in a conventional fiscal multiplier of the size of about 1 ranging from 0.6 to 1.3 in different samples of countries.
Author: Timothy F. Bresnahan
Publisher: University of Chicago Press
ISBN: 0226074188
Category : Business & Economics
Languages : en
Pages : 508
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Book Description
New goods are at the heart of economic progress. The eleven essays in this volume include historical treatments of new goods and their diffusion; practical exercises in measurement addressed to recent and ongoing innovations; and real-world methods of devising quantitative adjustments for quality change. The lead article in Part I contains a striking analysis of the history of light over two millenia. Other essays in Part I develop new price indexes for automobiles back to 1906; trace the role of the air conditioner in the development of the American south; and treat the germ theory of disease as an economic innovation. In Part II essays measure the economic impact of more recent innovations, including anti-ulcer drugs, new breakfast cereals, and computers. Part III explores methods and defects in the treatment of quality change in the official price data of the United States, Canada, and Japan. This pathbreaking volume will interest anyone who studies economic growth, productivity, and the American standard of living.
Author: Robert E. Hall
Publisher: University of Chicago Press
ISBN: 0226313255
Category : Business & Economics
Languages : en
Pages : 302
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Book Description
This volume presents the latest thoughts of a brilliant group of young economists on one of the most persistent economic problems facing the United States and the world, inflation. Rather than attempting an encyclopedic effort or offering specific policy recommendations, the contributors have emphasized the diagnosis of problems and the description of events that economists most thoroughly understand. Reflecting a dozen diverse views—many of which challenge established orthodoxy—they illuminate the economic and political processes involved in this important issue.
Author: Ying Zhao
Publisher:
ISBN:
Category :
Languages : en
Pages : 250
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Author: Yoon J. Jo
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper examines the impact of e-commerce on pricing behavior and welfare. Using Japanese data, we find that the entry of e-commerce firms significantly raised the rate of intercity price convergence for goods sold intensively online, but not for other goods. E-commerce also lowered relative inflation rates for goods sold intensively online. We overcome data challenges using long data series and historical catalog sales as an instrument for e-commerce sales intensity. We estimate that reductions in price dispersion raised welfare by 0.3 percent. E-commerce also lowered variety-adjusted prices on average by 0.9 percent, and more in cities with highly educated populations.
Author: Robert Phillips
Publisher: Stanford University Press
ISBN: 0804781648
Category : Business & Economics
Languages : en
Pages : 470
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Book Description
This is the first comprehensive introduction to the concepts, theories, and applications of pricing and revenue optimization. From the initial success of "yield management" in the commercial airline industry down to more recent successes of markdown management and dynamic pricing, the application of mathematical analysis to optimize pricing has become increasingly important across many different industries. But, since pricing and revenue optimization has involved the use of sophisticated mathematical techniques, the topic has remained largely inaccessible to students and the typical manager. With methods proven in the MBA courses taught by the author at Columbia and Stanford Business Schools, this book presents the basic concepts of pricing and revenue optimization in a form accessible to MBA students, MS students, and advanced undergraduates. In addition, managers will find the practical approach to the issue of pricing and revenue optimization invaluable. Solutions to the end-of-chapter exercises are available to instructors who are using this book in their courses. For access to the solutions manual, please contact
[email protected].
Author: Erik Brynjolfsson
Publisher: MIT Press
ISBN: 9780262523301
Category : Business & Economics
Languages : en
Pages : 412
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Book Description
The rapid growth of electronic commerce, along with changes in information, computing, and communications, is having a profound effect on the United States economy. President Clinton recently directed the National Economic Council, in consultation with executive branch agencies, to analyze the economic implications of the Internet and electronic commerce domestically and internationally, and to consider new types of data collection and research that could be undertaken by public and private organizations. This book contains work presented at a conference held by executive branch agencies in May 1999 at the Department of Commerce. The goals of the conference were to assess current research on the digital economy, to engage the private sector in developing the research that informs investment and policy decisions, and to promote better understanding of the growth and socioeconomic implications of information technology and electronic commerce. Aspects of the digital economy addressed include macroeconomic assessment, organizational change, small business, access, market structure and competition, and employment and the workforce.
Author: Viacheslav Sheremirov
Publisher:
ISBN:
Category :
Languages : en
Pages : 49
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Book Description
From a macroeconomic perspective, price rigidity is often perceived to be an important source of price dispersion, with significant implications for the dynamic properties of aggregate variables, welfare calculations, and the design of optimal policy. For instance, in standard New Keynesian models, the key cost of business cycles stems from the price dispersion resulting from firms' inability to adjust prices instantaneously. However, different macroeconomic models make conflicting predictions about the level of price dispersion, as well as about its dynamic properties and sensitivity to inflation. These contrasting predictions can help us to discriminate across alternative models. This paper examines the link between price dispersion and inflation, and the role of sales in this relationship.
