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Academic Papers Artículo en revista académica

Multi-establishment Firms, Pricing and the Propagation of Local Shocks: Evidence from US Retail

Do centralized pricing decisions by retail chains with a presence in multiple markets contribute to the propagation of local economic shocks? Using storelevel scanner data linked to county-level house prices during the Great Recession, I show that prices in a county respond to house price-induced demand shocks in distant counties served by the same chains. This pattern is consistent with a model of uniform pricing. Counterfactual analysis reveals that uniform pricing, combined with the geographic dispersion of retail chains, reduced cross-county dispersion of inflation by 50%, amplifying the effects of the Great Recession in areas more severely affected.