Cost of Being Poor: Retail Price and Consumer Price Search Differences across Inner-City and Suburban Neighborhoods

Journal of Consumer Research · 2008 · Volume 35 · Issue 3

Abstract

This research undertakes a carefully designed and detailed empirical study to gain insights into (1) the extent of price differentials between wealthy and poor neighborhoods; (2) what induces such differentials, especially the nature and intensity of competitive environments, including mass merchandisers like Wal-Mart; and (3) their relative impacts. It finds a price differential of about 10%–15% for everyday items. Even after controlling for store size and competition, prices are found to be 2%–5% higher in poor areas. It also finds that it is not the poverty level per se but access to cars that acts as a key determinant of consumers' price search patterns.

Keywords

Pricing, Information Search/Acquisition, Minority Issues, Public Policy Issues, Survey Research

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