March 2021
Article
Review of Economics and Statistics

Targeted Price Controls on Supermarket Products

By: Alberto Cavallo and Diego Aparicio

Format:Print

Abstract

We study the impact of targeted price controls for supermarket products in Argentina from 2007 to 2015. Using web scraping, we collected daily prices for controlled and non-controlled goods and measured the differential effects on inflation, product availability, and price dispersion. We first show that, although price controls are imposed on goods with significant CPI weight, they have a temporary effect on aggregate inflation and no downward effect on other goods. Second, contrary to common beliefs, we find that controlled goods are consistently available for sale. Third, firms compensate for price controls by introducing new product varieties at higher prices. This behavior, which increases price dispersion within narrow categories, is consistent with a standard vertical differentiation model in the presence of price controls.

Keywords

Prices; Controls; Price Dispersion; Economics; Price; Cost Management; Goods And Commodities; Retail Industry; Argentina

Citation

Cavallo, Alberto, and Diego Aparicio. "Targeted Price Controls on Supermarket Products." Review of Economics and Statistics 103, no. 1 (March 2021): 60–71.