Menu costs and dynamic duopoly

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Munich Personal RePEc Archive Menu Costs and Dynamic Duopoly

Examining a state-dependent pricing model in the presence of menu costs and dynamic duopolistic interactions, this paper claims that the assumption regarding market structure is crucial for identifying the menu costs for price changes. Prices in a dynamic duopolistic market can be more rigid than those in more competitive markets, such as a monopolistic-competition market. Therefore, the estima...

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This paper develops a model of a monetary economy in which individual firms are subject to idiosyncratic productivity shocks as well as general inflation. Sellers can change price only by incurring a real “menu cost.” We calibrate this cost and the variance and autocorrelation of the idiosyncratic shock using a new U.S. data set of individual prices due to Klenow and Kryvtsov. The prediction of...

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ژورنال

عنوان ژورنال: International Journal of Industrial Organization

سال: 2013

ISSN: 0167-7187

DOI: 10.1016/j.ijindorg.2012.11.002