Price Transparency, Media, and Informative Advertising
American Economic Journal: Microeconomics
vol. 15,
no. 1, February 2023
(pp. 1-29)
Abstract
We study the effects of a price transparency regulation in Israeli supermarkets. Using price data collected before and after the regulation and a difference-in-difference research design, we show that price levels and price dispersion declined significantly after the regulation. Chains also began setting identical prices in all stores. We use Robert and Stahl (1993) to interpret our findings, showing that low-priced chains extensively used price advertising after prices became transparent. These chains referenced price-comparison surveys conducted by the media to induce credibility for ads. Our findings highlight the importance of price transparency and the procompetitive role of informative advertising.Citation
Ater, Itai, and Oren Rigbi. 2023. "Price Transparency, Media, and Informative Advertising." American Economic Journal: Microeconomics, 15 (1): 1-29. DOI: 10.1257/mic.20200337Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L81 Retail and Wholesale Trade; e-Commerce
- L82 Entertainment; Media
- L88 Industry Studies: Services: Government Policy
- M37 Advertising
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