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α: calibrated so average coauthorship-adjusted count equals average raw count
We study how local competition affects price flexibility over the business cycle using a nationally representative US scanner database covering 2001 to 2011. We find that the entry of a grocery store has no significant effect on the frequency of price change at incumbent grocers in the same zip code, but the entry of a Walmart results in more frequent price changes. Looking across time, price change frequency increases during expansions and decreases during downturns; however, all else being equal, the presence of a Walmart mitigates much of this cyclical behavior, compared to other grocery store competitors that have no differential effect across the business cycle.