Goods Prices and Availability in Cities / Jessie Handbury, David E. Weinstein.

Format:

Book

Author/Creator:

Handbury, Jessie.

Contributor:

National Bureau of Economic Research.

Weinstein, David E.

Series:

Working Paper Series (National Bureau of Economic Research) no. w17067.

NBER working paper series no. w17067

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2011.

Summary:

This paper uses detailed barcode data on purchase transactions by households in 49 U.S. cities to overcome a large number of problems that have plagued spatial price index measurement. We identify two important sources of bias. Heterogeneity bias arises from comparing different goods in different locations, and variety bias arises from not correcting for the fact that some goods are unavailable in some locations. Eliminating heterogeneity bias causes 97 percent of the variance in the price level of food products across cities to disappear relative to a conventional index. Eliminating both biases reverses the common finding that prices tend to be higher in larger cities. Instead, we find that price level for food products falls with city size.

Notes:

Print version record

May 2011.