Regular Prices and Sales ∗ Paul

Regular prices and sales

Price setting in forward-looking customer markets

We propose a new explanation for price rigidity. If consumers form habits in individual goods, then firms face a time-inconsistency problem. The consumers’ habits imply that low prices in the future help attract customers in the present. Firms would therefore like to promise low prices in the future. But when the future arrives they have an incentive to exploit consumers’ habits and price gouge...

Information Acquisition for Capacity Planning via Pricing and Advance Selling: When to Stop and Act?

This paper investigates a capacity planning strategy that collects commitments to purchase before the capacity decision and uses the acquired advance sales information to decide on the capacity. In particular, we study a profit-maximization model in which a manufacturer collects advance sales information periodically prior to the regular sales season for a capacity decision. Customer demand is ...

Consumer bounded rationality and rigidity/flexibility retail price patterns

I revisit the model of market competition with boundedly rational consumers due to Spiegler (2006), in which firms compete in price distributions and consumers use a naive sampling procedure to evaluate them. I assume that firms can assign weight to arbitrarily low prices, and consumers have a non-trivial ex ante outside option. In symmetric Nash equilibrium, firms charge a high ‘‘regular price...

The Time-series Relation between Monthly Sales and Stock Prices

Focuses on several key industries like Textile, Plastics, and Electronics, this study applies the Vector Autoregressive Moving Average (VARMA) Model on the industrial sales index and industrial stock prices index to observe the dynamic relationship between sales and stock prices. Our empirical result has shown a consistent pattern of relationship between sales and stock prices among all industr...