TY  - JOUR
AU  - Lach,Saul
TI  - Existence and Persistence of Price Dispersion: an Empirical Analysis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8737
PY  - 2002
Y2  - January 2002
UR  - http://www.nber.org/papers/w8737
L1  - http://www.nber.org/papers/w8737.pdf
N1  - Author contact info:
Saul Lach
Department of Economics
Hebrew University
Jerusalem, 91905
ISRAEL
Tel: 972-2-5883253
Fax: 972-2-5816071
E-Mail: saul.lach@huji.ac.il
AB  - Using a unique data set on store-level monthly prices of four homogenous products sold in Israel, I study the existence and characteristics of the dispersion of prices across stores, as well as its persistence over time. I find that price dispersion prevails even after controlling for observed and unobserved product heterogeneity. Moreover, intra-distribution mobility is significant: stores move up and down the cross-sectional price distribution. Thus, consumers cannot learn about stores that consistently post low prices. As a consequence, price dispersion does not disappear and persists over time as predicted by Varian's (1980) model of sales.
ER  -