Tyra Merker, University of Oslo. "Explaining Uniform Pricing in Retail Markets – The Role of Consumer Self-Sorting"
Department seminar. Tyra Merker is a PhD student at the Department of Economics, University of Oslo . She will present the paper: "Explaining Uniform Pricing in Retail Markets – The Role of Consumer Self-Sorting".
This paper examines the empirical fact that large retail chains choose to set uniform prices across different local markets, forfeiting potentially large profits by not pricing to market. The paper contributes with a new explanation to uniform pricing strategies: heterogeneous consumers self-sort into different product types. This alleviates some concerns about both optimality and distribution. Using a large and novel data set of itemized shopping receipts from the Norwegian grocery market, I offer empirical support for this explanation. I also highlight policy implications: consumer self-sorting matters for the effects of consumption taxes, and calculations of optimal tax rates.