The Elusive Law of One Retail Chain Price

We investigate whether prices for identical products differ across more than 1600 French supermarkets and find non-trivial price dispersion, albeit more limited than in other countries. We determine that more than 80% of the total variance of the observed dispersion of relative prices across stores and time is explained by the spatial permanent component (stores consistently sell products at relatively high or low prices), essentially driven by persistent heterogeneity in retail chain pricing. The analysis of between and within retail chain price dispersion also provides evidence consistent with a rather centralized multi-stage price setting, in which local stores play a much smaller role than retail buying groups and local branches.