Price dispersion in Argentina

Abstract

We investigate how the structure of price dispersion is in Argentina. We use daily data reported by supermarkets and we measure price dispersion at the bar code level in order to analyze whether supermarkets set prices differently, whether those price differences are spatial or temporal, and whether a large devaluation shock affects pricing behavior. We use more than 9 million prices and we calculate the dispersion of weekly prices relative to the average monthly price per product. We found that on average across products the 90th percentile of relative prices is 10 percentage points higher than the 10th and the mean absolute deviation from monthly average product prices is 2%. Price dispersion across stores in Argentina is heterogeneous among retail chains but local conditions regarding demand or competition contribute significantly but they have small impact. Furthermore, we tested that supermarkets pricing behavior remains within its essence after a large devaluation shock.