Within a horizontal differentiation model and allowing for heterogeneous qualities, we analyze the effects of reference pricing reimbursement on firms' pricing strategies. With this analysis we find inherent incentives for firms' pricing behavior, and consequently we shed some light on the time consistency of such policy. The analysis encompasses different reference price rules: (i) reference p...

In this paper, we empirically examine the effect of inflation targeting on the exchange rate pass-through to prices in emerging countries. We use a panel VAR that allows us to use the larger data set on twenty-seven emerging countries (fifteen inflation targeters and twelve inflation nontargeters). Our evidence suggests that inflation targeting in emerging countries has helped to reduce the pas...

The lack of market development in remote areas is usually measured by the prices for a given set of consumer goods. We focus instead on the way distance constrains the variety in choices facing consumers. We construct a model of monopolistic competition between traders. An increase in transport costs reduces consumer welfare not only through lower incomes and higher prices but also through redu...

This paper examines how to evaluate consumer welfare when consumers face nonlinear prices. This problem arises in many settings, such as devising optimal pricing strategies for firms, assessing how price discrimination affects consumers, and evaluating the efficiency costs of many transfer programs in the public sector. We extend prior methods to accommodate a broad range of modern pricing prac...

We investigate whether time-series variation in consumer confidence affects the long-run association between prices and accounting based measures of fundamental value (hereafter, fundamentals). We estimate the components of consumer confidence related to expected growth and investor sentiment. We find a significant role for both expected growth and investor sentiment on the time-series associat...

Utilizing the Consumer Expenditure Survey and state-level variation in taxes, this study nds that prices for most models of new cars shift by more than the amount of a sales tax. The evidence of an overshifting of prices ooers support for the recent models of tax incidence in imperfectly competitive markets. The results also suggest that changes in the after-tax interest rate have oosetting eee...

Firms developing new products must often make a trade-o¤ between production costs and product quality: higher quality products are more valued by consumers, but also more costly to manufacture. We analyze this trade-o¤ in the context of demand uncertainty and strategic consumer behavior. Before the release of a product to a heterogeneous market of unknown size, a …rm must choose product quality...

Abstract This study reviews the direct and indirect effects of higher energy and bread prices (due to removing their subsidies and paying their equivalent in cash instead). Therefore, all consumer goods were classified into 6 groups and a linear expenditure system was estimated based on households’ budget data of 2009 and 2011 for urban and rural areas separately. The results indicate that hi...