Economies of scope in price setting: A moment inequalities estimation

• 成果类型: Article
• 署名作者: Stella, Andrea
• 署名单位: Federal Reserve System - USA; Federal Reserve System Board of Governors
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2018.12.006
• 发表日期: 2020
• 页码: 50-61
• 关键词: menu costs; moment inequalities; economies of scope; multiproduct firms

摘要

Using weekly data on prices, costs and units sold by a supermarket chain, a moment inequalities approach is used to estimate a discrete-choice dynamic model of a multiproduct firm facing menu costs. This empirical methodology allows to estimate two types of fixed costs of price adjustment: costs that are independent of the number of items that change prices and costs that are incurred at each item's price change. I find that both types of menu costs exist and are substantial. The total cost of changing prices is estimated to be bounded between 0.3% and 1.3% of revenues and between 17% and 65% of net margins. The first type of fixed cost accounts for between 23% and 99% of this expense, pointing to substantial economies of scope in price setting. Published by Elsevier B.V.