This paper provides new insight into the relationship between in‡ation and consumer price setting by examining a large data set of Mexican consumer prices covering episodes of both low and high in‡ation, as well as the transition between the two. The overall portrait is one in which the economy shares several characteristics of time dependent models when the annual in‡ation rate is low (below 1...

In communication, information, and other industries, three-part tariffs are becoming increasingly popular. A three-part tariff is defined by an access price, a usage allowance, and a marginal price for any usage in excess of the allowance. The nonlinear-pricing literature has focused primarily on two-part tariffs. We show that consumer behavior differs under three-part tariffs, in particular re...

Reference-Dependent Utility, Product Variety and Price Competition Products such as iPhone, Coca-Cola and Tide serve as the standard against which consumers evaluate other members of the category. Empirical evidence suggests consumers care about not only the consumption utility derived from a product but also the gain-loss utility in comparison to the reference product of the category. This pap...

This paper investigates whether extensions of the Calvo and menu-cost models that include idiosyncratic technology shocks are consistent with key features of individual consumer price adjustment. The comparison of the models focuses on three facts pertaining to the impact of inflation on the setting of consumer prices. First, the average frequency of consumer price changes initially rises slowl...

Abstract: To understand the dynamics of the manufacturer’s effort to reduce pollution in a supply chain consisting of manufacturer, retailer, and consumers, we analyze four cases according to consumer awareness of the pollution’s harmful effect, i.e., environmentally aware versus ignorant, and supply chain coordination, i.e., competitive versus cooperative. Applying differential games, we deriv...