The Kinked Demand Curve and Price Rigidity: Evidence from Scanner Data* (original) (raw)

Profile image of Dirk Van Den PoelDirk Van Den Poel

2010, Scandinavian Journal of Economics

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The paper starts with a discussion of the traditional explanations of the kinked demand curve. The following section considers the construction of a kinked demand based on the behavioural assumption of psychological sensitivity. Next, the impact on market demand curves is examined. Finally, there is an investigation of possible macroeconomic implications and also of a possible method for testing the presence of kinks in demand curves.

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EconomicsPrice ElasticityGeneral EquilibriumScandinavian