Media attention and price competition: Evidence from Norwegian grocery retailing

Abstract

Consumer journalism guides purchasing decisions when consumers lack complete information about attributes such as price, quality, and location. We focus on consumer journalism in the grocery market, where it is too time consuming for consumers to check all prices in different stores. This makes it attractive for media to attract readers by publishing grocery price comparisons. Norway’s largest newspaper has published grocery price comparisons over more than 20 years. However, the comparisons appear only sporadically (a few times each year) and include a relatively small number of items. Despite this, our empirical analysis of the Norwegian grocery market reveals that these price comparisons have a significant impact on market performance. They intensify competition, leading to price reductions when market players anticipate upcoming comparisons. Conversely, after a comparison is published, prices increase. Remarkably, sporadic consumer journalism, offering snapshots of prices for a few products, thus has a significant impact on grocery chains’ competitive pricing behavior. Chains heavily utilize a win in a price comparison in their own advertising, further reinforcing the competitive impact of consumer journalism.