Online seminar – Price transparency, media and informative advertising

Professor Itai Ater, Coller School of Management, Tel Aviv University

We study the effects of a regulation requiring supermarket chains in Israel to post prices online. Using price data collected before and after the regulation went into effect and a differences in differences research design, we show that both price levels and price dispersion declined after the regulation was instituted. These patterns were driven primarily by price reductions in high priced chains. Chains also nearly eliminated within chain price dispersion, by setting identical prices in all stores. We use the framework by Robert and Stahl (1993) to interpret our findings. Consistent with their model, we show that after prices became transparent low priced chains used extensively price advertising, referencing to price comparison surveys conducted by the media to induce credibility. Our findings highlight the importance of the media in facilitating credible informative advertising and the pro competitive role of advertising.

Speaker bio

Professor Ater is a member of the Business Economics and Strategy group. Itai joined the Coller School of Management in 2008 and his research focuses in the areas of industrial organisation, antitrust, organisational economics and law and economics. Itai earned his Bachelor (Law and Economics) and Master degrees, both Cum Laude from the Hebrew University. Before pursuing his PhD studies in Economics at Stanford University, he also worked at the Israeli Antitrust Authority. Professor Ater studies how government policies, consumer behaviour and firm actions contribute to the market outcomes in the food, automobile and real estate markets.

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Meeting ID: 880 9681 5173
Password: 130612

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