Standard models assume uniform pricing across stores (DellaVigna and Gentzkow 2019). We show that uniform pricing varies across products within food categories. Even when product-chain prices are nearly uniform, cross-market differences in retailer and product composition generate spatial dispersion in effective price levels. Poorer metropolitan statistical areas are served by fewer chains, have a higher share of large national retailers, and exhibit lower product variety across and within retailers. Ignoring this heterogeneity understates price-level gaps between poor and rich areas. These results complement Kim and Navarrete (2025), who identify retail market structure as a key driver of spatial inflation heterogeneity.
Kim et al. (Fri,) studied this question.