Million Dollar Plants and Retail Prices

This paper studies how the opening of a Million Dollar Plant (MDP) affects income inequality, by focusing on a new mechanism: retail inflation. Using detailed barcode-level prices, the paper shows that local barcode-level prices increased in winnin...

Full description

Bibliographic Details
Main Authors:	Bhardwaj, Abhishek, Ghose, Devaki, Mukherjee, Saptarshi, Singh, Manpreet
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2022
Subjects:	INEQUALITY INFLATION MILLION DOLLAR PLANT IMPACT QUALITY OF LIFE SOCIAL IMPACT OF AMAZON WAGE EFFECT ON RETAIL PRICES RETAIL INFLATION WORKER PROTECTION HOUSEHOLD SHOPPING DATA
Online Access:	http://documents.worldbank.org/curated/en/099329204052228064/IDU0747ee7be00744045590ac3702470e2bb33e7 http://hdl.handle.net/10986/37275

id	okr-10986-37275
recordtype	oai_dc
spelling	okr-10986-372752022-04-16T09:22:09Z Million Dollar Plants and Retail Prices Bhardwaj, Abhishek Ghose, Devaki Mukherjee, Saptarshi Singh, Manpreet INEQUALITY INFLATION MILLION DOLLAR PLANT IMPACT QUALITY OF LIFE SOCIAL IMPACT OF AMAZON WAGE EFFECT ON RETAIL PRICES RETAIL INFLATION WORKER PROTECTION HOUSEHOLD SHOPPING DATA This paper studies how the opening of a Million Dollar Plant (MDP) affects income inequality, by focusing on a new mechanism: retail inflation. Using detailed barcode-level prices, the paper shows that local barcode-level prices increased in winning counties compared to runner up counties after a MDP enters. The paper further shows that households in winning counties spend less time shopping for deals and discounts and more time on work. Wages also go up in winning counties, but only for high-skilled workers. The paper builds a model of monopolistic firms with variable mark-ups and non-homothetic consumer preferences. Consumers become less price sensitive as they substitute shopping time for more working time in response to rising labor demand generated by the entry of a MDP, and firms respond to less elastic consumer demand by raising their mark-ups. Analysis using the model and detailed reduced form evidence shows that establishing a MDP only increases wages of certain high-skilled workers, but it increases overall county-level prices, thus creating larger increases in income inequality in winning counties compared to runner-up counties. 2022-04-07T17:41:26Z 2022-04-07T17:41:26Z 2022-04 http://documents.worldbank.org/curated/en/099329204052228064/IDU0747ee7be00744045590ac3702470e2bb33e7 http://hdl.handle.net/10986/37275 English Policy Research Working Paper;9995 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Policy Research Working Paper Publications & Research United States
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	INEQUALITY INFLATION MILLION DOLLAR PLANT IMPACT QUALITY OF LIFE SOCIAL IMPACT OF AMAZON WAGE EFFECT ON RETAIL PRICES RETAIL INFLATION WORKER PROTECTION HOUSEHOLD SHOPPING DATA
spellingShingle	INEQUALITY INFLATION MILLION DOLLAR PLANT IMPACT QUALITY OF LIFE SOCIAL IMPACT OF AMAZON WAGE EFFECT ON RETAIL PRICES RETAIL INFLATION WORKER PROTECTION HOUSEHOLD SHOPPING DATA Bhardwaj, Abhishek Ghose, Devaki Mukherjee, Saptarshi Singh, Manpreet Million Dollar Plants and Retail Prices
geographic_facet	United States
relation	Policy Research Working Paper;9995
description	This paper studies how the opening of a Million Dollar Plant (MDP) affects income inequality, by focusing on a new mechanism: retail inflation. Using detailed barcode-level prices, the paper shows that local barcode-level prices increased in winning counties compared to runner up counties after a MDP enters. The paper further shows that households in winning counties spend less time shopping for deals and discounts and more time on work. Wages also go up in winning counties, but only for high-skilled workers. The paper builds a model of monopolistic firms with variable mark-ups and non-homothetic consumer preferences. Consumers become less price sensitive as they substitute shopping time for more working time in response to rising labor demand generated by the entry of a MDP, and firms respond to less elastic consumer demand by raising their mark-ups. Analysis using the model and detailed reduced form evidence shows that establishing a MDP only increases wages of certain high-skilled workers, but it increases overall county-level prices, thus creating larger increases in income inequality in winning counties compared to runner-up counties.
format	Policy Research Working Paper
author	Bhardwaj, Abhishek Ghose, Devaki Mukherjee, Saptarshi Singh, Manpreet
author_facet	Bhardwaj, Abhishek Ghose, Devaki Mukherjee, Saptarshi Singh, Manpreet
author_sort	Bhardwaj, Abhishek
title	Million Dollar Plants and Retail Prices
title_short	Million Dollar Plants and Retail Prices
title_full	Million Dollar Plants and Retail Prices
title_fullStr	Million Dollar Plants and Retail Prices
title_full_unstemmed	Million Dollar Plants and Retail Prices
title_sort	million dollar plants and retail prices
publisher	World Bank, Washington, DC
publishDate	2022
url	http://documents.worldbank.org/curated/en/099329204052228064/IDU0747ee7be00744045590ac3702470e2bb33e7 http://hdl.handle.net/10986/37275
_version_	1764486851092021248

Million Dollar Plants and Retail Prices

Similar Items