Retail Price Reporting Effects in Local Food Markets

Abstract

Abstract An experiment involving weekly newspaper publication of comparative food store prices in four U.S. cities stimulated competitive pricing behavior without reinforcement from consumer patronage shifts. Costs of a fixed, 100‐item market basket fell, relative to control markets, an average of two percent during publication and recovered with termination of the reports. Responses varied among cities, stores, and product categories. Price dispersion was not affected. While consumers judged the information to be useful and accurate, it did not induce changes in their perceptions or shopping patterns. Grocer responses were attributed to the publicity value of the price reports.