Price Points and Price Rigidity (original) (raw)

Price Rigidity and Flexibility: New Empirical Evidence - Introduction to the Special Issue

Managerial and Decision Economics, 2007

The marketplace, along with its price system, is the single most important institution in a western‐style free enterprise economy. The ability of prices to adjust to changes in supply and demand conditions enables the market to function efficiently, and that ability lies behind the magical invisible hand mechanism. The behaviour of prices and in particular the ability of prices to adjust to changes in market conditions, therefore, have fundamental implications for many key issues in many areas of both microeconomics as well as macroeconomics. It is, therefore, critical to study and understand whether there are barriers to price adjustments, what are the nature of these barriers, how the barriers lead to price rigidity, what are the possible implications of these rigidities, etc. This introductory essay briefly summarizes the 14 empirical studies of price rigidity that are included in this special issue.

Price Rigidity and Flexibility: Recent Theoretical Developments - Introduction to the Special Issue

Managerial and Decision Economics, 2007

The price system, the adjustment of prices to changes in market conditions, is the primary mechanism by which markets function and by which the three most basic questions get answered: what to produce, how much to produce and for whom to produce. To the behaviour of price and price system, therefore, have fundamental implications for many key issues in microeconomics and industrial organization, as well as in macroeconomics and monetary economics. In microeconomics, managerial economics, and industrial organization, economists focus on the price system efficiency. In macroeconomics and monetary economics, economists focus on the extent to which nominal prices fail to adjust to changes in market conditions. Nominal price rigidities play a particularly important role in modern monetary economics and in the conduct of monetary policy because of their ability to explain short‐run monetary non‐neutrality. The behaviour of prices, and in particular the extent of their rigidity and flexibility, therefore, is of central importance in economics. This introductory essay briefly summarizes the eight studies of price rigidity that are included in this special issue.

Retail Pricing Format and Rigidity of Regular Prices

SSRN Electronic Journal, 2021

We study different notions of sale and regular prices, and their variability with store pricing - formats. We us e data from three large stores with different pricing - formats (EDLP /Hi- Lo/Hybrid) that are located within 1 - km radius. Importantly, the data contain both the actual transaction prices and the actual regular prices as displayed on the store shelves. We combine these data with two “generated” regular price series and study their rigidity. Regular - price rigidity varies with store - formats because different format stores define regular - prices differently. Correspondingly, the meaning of price - cuts var ies across store - formats. To interpret the findings, we consider the store pricing format distribution across the US.

Price Rigidity and Cost Pass-Through

2018

This paper contributes to the literature by investigating empirically the role of wholesale cost pass-through, mark-ups, search costs, seasonality and spatial components, as determinants of sticky retail prices.