Unit Pricing Regulation and Retailer Assortment : Evidence from the U.S. Yogurt Market

Unit Pricing Regulation (UPR) was introduced to help consumers make more informed decisions by displaying unit prices in addition to product prices. Despite extensive research on UPR effects on consumers’ perceptions and decisions, much less is known about the impacts on retail stores’ price and non-price responses under intensified price competition brought by UPR. Relying on the geographic variation in UPR implementation across states, we identify UPR impacts on the store’s product offerings and pricing. Results show that mass merchandizers remove products without changing prices, whereas grocery stores without same-chain peer stores not under UPR add brands and charge higher prices on average. Using a structural demand model, we find that, on average, consumer welfare falls for both retail formats, highlighting an unintended policy effect