Search with Learning and Price Adjustment Dynamics
نویسندگان
چکیده
منابع مشابه
Search with learning: understanding asymmetric price adjustments
In many retail markets, prices rise faster than they fall. We develop a model of search with learning to explain this phenomenon of asymmetric price adjustments. By extending our static game analysis to the dynamic setting, we demonstrate that asymmetric price adjustments arise naturally. When a positive cost shock occurs, all the searchers immediately learn the true state; the search intensity...
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We derive a measure of firm speed of price adjustment that is directly inversely related to market power and compare this to the measure derived by Martin (1993). However, both measures are incorrect when firms have non-zero price conjectural variations and treat competing price levels as exogenous. This is because Taylor series expansions of the demand function implicitly assume that firms inf...
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We establish a new empirical finding that the intensity of search for the best price affects the frequency of nominal price changes. This relationship holds in very different economies and for various proxies for search intensity. We show that it can be derived from a simple model of monopolistically competitive firms that face menu costs of changing nominal prices and heterogeneous consumers w...
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In an in nite horizon model with stochastic costs, moderate ination, costly price adjustment, and optimal price setting, we demonstrate that individual price reductions will be larger but less frequent than price increases. With positive ination, aggregate prices are more responsive to cost increases than to cost decreases, and a calibrated version of the model ts well the magnitude of downw...
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The Thanksgiving-Christmas holiday period is a major sales period for US retailers. Due to higher store traffic, tasks such as restocking shelves, handling customers’ questions and inquiries, running cash registers, cleaning, and bagging, become more urgent during holidays. As a result, the holiday-period opportunity cost of price adjustment may increase dramatically for retail stores, which sh...
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ژورنال
عنوان ژورنال: The Quarterly Journal of Economics
سال: 1996
ISSN: 0033-5533,1531-4650
DOI: 10.2307/2946664