DP14514 Store expensiveness and consumer saving: Insights from a new decomposition of price dispersion
|Author(s):||Sofronis Clerides, Pascal Courty, Yupei Ma|
|Publication Date:||March 2020|
|Keyword(s):||consumer saving, grocery shopping, price dispersion, store expensiveness|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=14514|
We build on recent work analyzing consumers' ability to save by exploiting price dispersion in grocery stores. We show that store expensiveness is not universal but varies across consumers depending on the basket they consume. We incorporate this insight into a decomposition of price variance that is a refinement of Kaplan and Menzio's (2015) approach. Our analysis finds that the ability to choose the right product at the right store is much less important than Kaplan and Menzio found; rather, the ability to choose the cheapest stores for one's basket is the main source of variance in consumer savings.