Hot and Spicy : Ups and Downs on the Price Floor and Ceiling at Japanese Supermarkets ¤

  title={Hot and Spicy : Ups and Downs on the Price Floor and Ceiling at Japanese Supermarkets ¤},
  author={Kenn Ariga and Konomu Matsui and Makoto Watanabe},
This paper develops a dynamic pricing model of a monopolistic retail store who sells a storable good to ex ante homogeneous customers. We show that frequent price changes between a few focal prices can be the profit maximizing price policy of the store. The key mechanism is that customers’ willingness to pay depends on whether they buy the good for immediate consumption or for their inventory. Our empirical findings support the characteristics of this price policy: (1) stores tend to lower the… CONTINUE READING


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