Working Paper Revision

Macroeconomic Implications of Uniform Pricing


Abstract: We compile a new database of grocery prices in Argentina. We find uniform pricing both within and across regions—i.e., prices almost do not vary within stores of a chain. In line with uniform pricing, prices in stores of chains operating in one region react to changes in regional employment, while prices in multi-region chains do not. Using a quantitative regional model with multi-region firms and uniform pricing, we find a one-half smaller elasticity of prices to a regional than an aggregate shock. This result highlights that some caution may be necessary when using regional shocks to estimate aggregate elasticities.

Keywords: Price Dispersion; Regional Economics; Uniform Pricing;

JEL Classification: D40; E30; L10; R10;

https://doi.org/10.20955/wp.2019.024

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Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2021-01-29

Number: 2019-024

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