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Store expensiveness and consumer saving: Insights from a new decomposition of price dispersion

Author

Listed:
  • Sofronis Clerides

    (University of Cyprus; CEPR; Rimini Centre for Economic Analysis)

  • Pascal Courty

    (University of Victoria, Canada; CEPR)

  • Yupei Ma

    (University of British Columbia, Canada)

Abstract
We build on recent work analyzing consumers' ability to save by exploiting price dispersion in grocery stores. We show that store expensiveness is not universal but varies across consumers depending on the basket they consume. We incorporate this insight into a decomposition of price variance that is a refinement of Kaplan and Menzio's (2015) approach. Our analysis finds that the ability to choose the right product at the right store is much less important than Kaplan and Menzio found; rather, the ability to choose the cheapest stores for one’s basket is the main source of variance in consumer savings.

Suggested Citation

  • Sofronis Clerides & Pascal Courty & Yupei Ma, 2020. "Store expensiveness and consumer saving: Insights from a new decomposition of price dispersion," Working Paper series 20-08, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:20-08
    as

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    References listed on IDEAS

    as
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    Cited by:

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    2. Carike Claassen & Elsabé Loots & Henri Bezuidenhout, 2011. "Chinese Foreign Direct Investment in Africa," Working Papers 261, Economic Research Southern Africa.
    3. Razzak Weshah A. & Bentour El M., 2013. "Do Developing Countries Benefit from Foreign Direct Investments? An Analysis of Some Arab and Asian Countries," Review of Middle East Economics and Finance, De Gruyter, vol. 9(3), pages 357-388, December.

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    More about this item

    Keywords

    Price dispersion; grocery shopping; consumer saving; store expensiveness;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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