Massachusetts Institute of Technology
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Cambridge, MA 02139
Institutional Affiliation: Massachusetts Institute of Technology
NBER Working Papers and Publications
|February 2018||Targeted Price Controls on Supermarket Products|
with Alberto Cavallo: w24275
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...