Rotterdam Brown Bag Seminars General Economics

Agnieszka Markiewicz (Erasmus University Rotterdam)
Wednesday, 1 November 2017

We investigate the impact of regional economic activity on the pricing decisions of a nationwide retailer. Using the universe of transactions data from a retailer of durable goods, covering more than 35000 products and hundreds stores from 1999 until 2010, we investigate the impact on prices for base and usually unobserved add-ons. For the base good we find that regional downturns have a negligible impact on its price. For the add on, downturns induce substantial reductions in its price. The results imply that the price cyclicality is much higher than the one we usually observe. Joint work with Sacha Kapoor