Economic Quarterly

Second Quarter 2016

Price Dispersion When Stores Sell Multiple Goods

Nicholas Trachter

A notable feature of most markets is that firms are multiproduct, in the sense that they offer for sale more than one single type of good. In this paper, I discuss a recent paper, Kaplan et al. (2016), that explores both empirically and theoretically price dispersion in a multiproduct setting. I discuss, with some detail, their empirical strategy and main empirical findings: a big part of price dispersion for a good in an area comes from stores with the same overall price level pricing individual goods in persistently different ways. I then go over the simple model proposed by the authors that can make sense of the novel empirical finding.


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