Modelling the Heterogeneous Price Setting Behavior of Firms (DSGE Approach)

Evaluation of Price Setting Models in Iran’s Economy (DSGE Approach)

 Despite the consensus on the importance of nominal rigidities, there is no general agreement among monetary economists regarding the most appropriate and consistent pricing model that must be used to assess the effects of monetary policies in the economy. Due to the lack of empirical evidence with relation to the pricing behavior of Iranian firms, there is no general agreement on how to introd...

Spatial Price Discrimination with Heterogeneous Firms*

In this paper we aim to explain intuitively heterogeneous firms’ optimal location decisions in a simple spatial market. To do so, we present and solve a four-stage game of entry, location, pricing and consumption in a spatial price discrimination framework with arbitrarily many heterogeneous firms. We provide a unique equilibrium outcome without imposing restrictions on the distribution of marg...

Liquidity Demand of Heterogeneous Firms in the Economy of Iran: Microfoundation Approach

One of the main reasons in economic recession is the liquidity constraints of economic firms. When external finance becomes expensive for firms, money demand will act as a buffer stock. Actually, firms reduce unfavorable effect of liquidity constraints by holding money. In this study, after extracting firms liquidity demand function based on micro foundations and creating an index for firms liq...

The Threshold Reaction of Price Setting Behavior Indexes to Inflation Rate Changes: An Application of Price Micro Information to Understand the Changes of Price Rigidity Degree

In this paper we measure the price stickiness in Iran’s economy. More specifically, we use sub-aggregates data of consumer price index from 1990:3 to 2014:2 to investigate the analyze the frequency and size of price changes and test whether they are affected from the CPI variations. This is important as it determined how much the monetary authority can expect to have influence on the real ec...

Statistical Model And Estimation Of The Optimum Price For A Chain Of Price Setting Firms

Heterogeneous Firms Can Always Collude on a Minimum Price∗

When firms are heterogeneous, there may not exist a common collusive price that raises all firms’profits. However it is shown that there always exists a common minimum price that raises all firms’profits.