When Little Things Mean a Lot: On the Inefficiency of Item Pricing Laws
- Topics:
- Pricing and Margins,
- Pricing Strategy
- Tags:
- Benefits,
- Human Resources,
- Law,
- Marketing,
- Marketing Research,
- Pricing,
- Pricing Strategy,
- Retail,
- University Of Minnesota
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Overview: This paper studies Item Pricing Laws (IPLs) (which require that each item in a store be individually marked with a price sticker) and examine and quantify their costs and benefits. On the cost side, the paper argues that item-pricing laws increase the retailers' costs, forcing them to raise prices. This prediction is tested using data on retail prices from large supermarket chains in the Tri-State area of New York, New Jersey and Connecticut. The Tri-States offer a unique setting - a natural experiment - to study item-pricing laws because the States vary in their use of item-pricing laws, but otherwise offer similar markets and chains operating in a close proximity to each other in a relatively homogenous socioeconomic environment.
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Format: PDF | Size: 280KB | Date: May 2004 | Pages: 65
