Price Promotion Measures and Dispersion
For each retailer, we calculate various measures of pricediscounting
activity. We do so with the view toward price
discounts reflecting price changes over time. During June
2002, each book had a sequence of daily retailer prices.
Average price for any retailer is the average of all normalized
prices for that retailer; we calculate normalized prices
by dividing any given book price by the highest price
quoted for that book by any one of the 14 retailers in the
sample period. The standard deviation of the normalized
prices in each sequence, averaged over all the books carried
by the retailer, gives the average standard deviation. For
each retailer, we also count the number of price changes in
our daily data. We then average that figure across all the
books the retailer sold to calculate the average number of
price changes (discount frequency). We find the maximum
by taking the highest number of price changes for the
retailer across books. We calculate the retailer’s absolute
changes in normalized prices, averaged across all books, to
obtain the average and maximum depth of discounts across
books for that retailer.
The summary retailer price statistics appear in Table 2.
Figure 4 presents the empirical CDF of normalized prices
for the 14 retailers. The numbers in parentheses next to each
retailer in the figure refer to the same ordering as in Table
2.9