Prof. Christopher Knittel speaks with Wall Street Journal reporter Andrew Duehren about how European governments are beginning to experiment with new ways to control energy prices.“Especially with the European energy-market policy interventions, what policy makers do not want to do is exacerbate these problems with their policies, and my fear is that is what these proposals would do,” says Knittel.
New York Times reporter Daisuke Wakabayashi highlights a paper written by Prof. Glenn Ellison, head of MIT’s Department of Economics, and Senior Lecturer Sarah Fisher Ellison explaining how technology has made it easier to find products, but retailers have retaliated by raising prices. “To the extent that there is more obfuscation going on, consumers pay more for everything,” said Ellison. Wakabayashi also spotlights a study by Prof. Amy Finkelstein that found “when people use cash less, prices go up.”
A new paper by MIT researchers finds that instead of raising prices, companies are replying on “shrinkflation - reducing the size of products or their quality while charging the same price,” reports Dion Rabouin for Axios.
A study by MIT researchers examines how large retailers often slot items into certain price points, reports The Economist. The researchers found that retailers, “seem to design products to fit their preferred price points. Given a big enough shift in market conditions, such as an increase in labor costs, firms often redesign a product to fit the price rather than tweak the price.”
In an article for the Financial Times, Robin Wigglesworth highlights Profs. Alberto Cavallo and Roberto Rigobon’s work with the Billion Prices Project. Wigglesworth notes that the project is an, “example of a broader trend of trawling the swelling sea of big data for clues on how companies, industries or entire economies are performing.”
Financial Times reporter Tim Harford writes about the Billion Prices Project, which was started by Profs. Alberto Cavallo and Roberto Rigobon in an effort to better understand inflation by gathering price data from online retailers. Harford writes that the project’s “approach to inflation is also helping us to understand the fundamental question of why recessions happen.”