Research

Master Thesis

Pricing Strategies of Supermarkets in Uruguay

🔹 Master’s Thesis — M.S. Economics, Universidad de la República
🔹 Administrative dataset: 2.6M+ price observations
🔹 Focus: pricing dynamics, inflation, firm behavior

📄 Full Report (includes full methodology and appendix):

📄 Download Full Thesis (PDF)

📊 Methods

  • Descriptive statistics
  • Survival analysis
  • Hazard modeling
  • Panel data analysis

🎯 Research Focus

  • Price-setting behavior
  • Inflation dynamics
  • Market structure
  • Firm strategy

📈 Key Findings

  • 26% of prices change monthly
  • Inverse frequency–magnitude pattern
  • Evidence of state-dependent pricing
📘 Trimmed Version

🔍 Research Summary

Understanding price-setting behavior is key to analyzing inflation dynamics and the effectiveness of policy. This study examines how supermarket chains in Uruguay adjust prices over time, using administrative data to evaluate frequency, magnitude, and synchronization of price changes.

Key Questions

  • Are pricing strategies consistent within chains?
  • How synchronized are price changes across firms?
  • Do firms follow time-based or state-dependent pricing models?

📊 Data

  • 154 products | 267 stores | 12 chains
  • 2011–2019 time period

  • 2.6 million observations

✔ Monthly aggregation to remove promotional noise
✔ Consistent product panel construction
✔ Quality-checked administrative data

⚙️ Methodology

Price Dynamics

  • Frequency of price changes
  • Magnitude of adjustments
  • Implicit duration

Duration Analysis

  • Survival functions
  • Hazard models

👉 Provides evidence on how long prices remain fixed and when firms adjust

Synchronization

  • Fisher–Konieczny index (0 = no sync, 1 = perfect sync)

📈 Results

Price Behavior

  • ~26% of prices change monthly
  • Average duration ~ 4 months
  • Average change ~ 3.9%

👉 Firms balance flexibility with adjustment costs

Firm Strategies

  • Strong heterogeneity across chains
  • Within-chain behavior is highly consistent

👉 Suggests centralized pricing strategies

Duration & Adjustment

  • 50% of prices change within 2 months

  • Hazard function is upward-sloping

✅ Evidence supports state-dependent pricing

Synchronization

  • FK index: 0.52 – 0.75

👉 Moderate coordination, not perfect alignment
👉 Organizational structure explains differences

🧠 Policy Insights

  • Micro-price rigidity shapes inflation dynamics
  • Frequency of adjustments affects policy transmission
  • Firm-level behavior influences market outcomes

⚠️ Limitations

  • No demand-side data
  • Strategy drivers not directly observed
  • Product mix differs across chains

🔮 Future Work

  • Integrate demand and competition data
  • Use geospatial analysis
  • Study consumer response

🎓 Master’s Thesis Advisor

🔹 Hermes Javier López Sosa

Characterization of Uruguay’s Regulated Financial System (2013–2023)

🔹 Martín Rey & Paolo Pinotti

Machine Learning Applications to Price Duration

Presented at: Central Bank of Uruguay (BCU), 2025 📊 View Presentations