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Discussion Paper Details

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Title: The Effects of Mandatory Disclosure of Supermarket Prices

Author(s): Itai Ater and Oren Rigbi

Publication Date: October 2017

Keyword(s): Information, Mandatory Disclosure, Price Transparency, Retail Food and Supermarkets

Programme Area(s): Industrial Organization

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.

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Bibliographic Reference

Ater, I and Rigbi, O. 2017. 'The Effects of Mandatory Disclosure of Supermarket Prices'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12381