Working Paper: NBER ID: w24275
Authors: Diego Aparicio; Alberto Cavallo
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: No keywords provided
JEL Codes: D22; E31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Price controls (E64) | lower prices (P22) |
| Price controls (E64) | temporary impact on aggregate inflation (E31) |
| Price controls (E64) | higher probability of temporary stockouts (C69) |
| Price controls (E64) | similar availability to non-controlled goods (L59) |
| Price controls (E64) | introduction of new varieties at higher prices (D40) |
| introduction of new varieties at higher prices (D40) | increased price dispersion (D49) |