NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Why Don't Prices Rise During Periods of Peak Demand? Evidence from Scanner Data

Judith A. Chevalier, Anil K. Kashyap, Peter E. Rossi

NBER Working Paper No. 7981
Issued in October 2000
NBER Program(s):   EFG   IO   ME

We examine the retail prices and wholesale prices of a large supermarket chain in Chicago over seven and one-half years. We show that prices tend to fall during the seasonal demand peak for a product and that changes in retail margins account for most of those price changes; thus we add to the growing body of evidence that markups are counter-cyclical. The pattern of margin changes that we observe is consistent with loss leader' models such as the Lal and Matutes (1994) model of retailer pricing and advertising competition. Other models of imperfect competition are less consistent with retailer behavior. Manufacturer behavior plays a more limited role in the counter-cyclicality of prices.

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Document Object Identifier (DOI): 10.3386/w7981

Published: Chevalier, Judity A., Anil K. Kashyap and Peter E. Rossi. "Why Don't Prices Rise During Periods Of Peak Demand? Evidence From Scanner Data," American Economic Review, 2003, v93(1,Mar), 15-37.

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