Which price is right? A comparison of three standard approaches to measuring prices

A-Tier
Journal: Journal of Development Economics
Year: 2023
Volume: 163
Issue: C

Score contribution per author:

4.022 = (α=2.01 / 1 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Prices are fundamental to economists, but there is little guidance on how to collect accurate data on prices in developing countries. I compare antimalarial drug prices collected using three different approaches at outlets in Uganda: vendor inventory listings, prices reported by real customers, and standardized patient (“mystery shopper”, or SP) purchases. I find that prices collected from SPs and real customers are the same after accounting for the composition of drugs purchased, but prices reported by vendors are $0.29-$0.34 (17 percent) lower than the other two approaches. Price disagreement is correlated with vendors reporting fewer drugs on the inventory. The analysis suggests vendors adjust list prices based upon transaction-specific characteristics, but much price disagreement is unexplained. I conclude SP purchases are a preferred approach to price measurement: they accurately capture mean prices paid by customers, and other important transaction characteristics.

Technical Details

RePEc Handle
repec:eee:deveco:v:163:y:2023:i:c:s0304387823000615
Journal Field
Development
Author Count
1
Added to Database
2026-01-25