Title

Do the Poor Pay More? An Empirical Investigation of Price Dispersion in Food Retailing

Author(s)

Lashawn Richburg Hayes Lashawn Hayes (Rutgers University )

Abstract

On the question of whether prices are higher in poor, urban neighborhoods, the prior research is decidedly mixed. This paper revisits the question by analyzing unpublished price-level data collected by the Bureau of Labor Statistics for construction of the Consumer Price Index. Using this large, statistically representative sample of stores in poor and affluent neighborhoods, I first estimate if a price difference exists. I then empirically test the major arguments in support of disparate prices such as differences in quality, operating and consumer search costs. I also explore the relationship between pricing strategies and the racial and ethnic composition of poor neighborhoods. I find that market prices are up to 6 percent less in poor neighborhoods after controlling for a variety of covariates. In addition, I find that poor, predominantly white and Hispanic neighborhoods experience significant discounts, while market prices in poor, predominantly black neighborhoods are comparable to those in affluent white areas.

Creation Date

2000-09

Section URL ID

IRS

Paper Number

446

URL

https://dataspace.princeton.edu/bitstream/88435/dsp015q47rn74m/1/446.pdf

File Function

Jel

O50, L66, Q11

Keyword(s)

Suppress

false

Series

1