Asking About Prices: A New Approach to Understanding Price Stickiness. Alan S. Blinder, Elie R. D. Canetti, David F. Lebow, and Jeremy B. Rudd.

Asking About Prices: A New Approach to Understanding Price Stickiness. Alan S. Blinder, Elie R.... 98 BOOK REVIEW so useful for macroeconomics include a number of results of particular significance for microeconomics. Hence this review. What are the theories which macroeconomists have proposed as reasons for price stickiness? The authors identify twelve as of 1988, all micro, all from macro- economists’ attempts to answer the question why prices are sticky. The theories, briefly: Table I. 1. “Nominal contracts” “Prices are fixed by [written] contracts” which last for a significant period 2. “Implicit contracts” Absent written contracts, “firms tacitly agree to stabilize prices”, a ` la Okun 3. “Judging quality by price” Price cuts might signal quality reductions to customers 4. “Pricing points” Some “psychological significance” attaches to certain prices “like $9.99” 5. “Procyclical elasticity” “Demand curves become less elastic as they shift in” 6. “Cost-based pricing” An increase in costs is reflected in increased prices but with “delays” as price changes move “through a multi-stage production process” 7. “Constant MC” A constant markup over a flat MC, hence price changes are infrequent, even though demand shifts. 8. “Costly price adjustment” Price changes themselves incur costs (called “menu costs”) 9. “Hierarchy” Internal layers of management bureaucracy impose delays in decision making 10. “Coordination failure” “Firms http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Asking About Prices: A New Approach to Understanding Price Stickiness. Alan S. Blinder, Elie R. D. Canetti, David F. Lebow, and Jeremy B. Rudd.

Loading next page...
 
/lp/springer_journal/asking-about-prices-a-new-approach-to-understanding-price-stickiness-35OA3q3n0I
Publisher
Kluwer Academic Publishers
Copyright
Copyright © 1999 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1007858331569
Publisher site
See Article on Publisher Site

Abstract

98 BOOK REVIEW so useful for macroeconomics include a number of results of particular significance for microeconomics. Hence this review. What are the theories which macroeconomists have proposed as reasons for price stickiness? The authors identify twelve as of 1988, all micro, all from macro- economists’ attempts to answer the question why prices are sticky. The theories, briefly: Table I. 1. “Nominal contracts” “Prices are fixed by [written] contracts” which last for a significant period 2. “Implicit contracts” Absent written contracts, “firms tacitly agree to stabilize prices”, a ` la Okun 3. “Judging quality by price” Price cuts might signal quality reductions to customers 4. “Pricing points” Some “psychological significance” attaches to certain prices “like $9.99” 5. “Procyclical elasticity” “Demand curves become less elastic as they shift in” 6. “Cost-based pricing” An increase in costs is reflected in increased prices but with “delays” as price changes move “through a multi-stage production process” 7. “Constant MC” A constant markup over a flat MC, hence price changes are infrequent, even though demand shifts. 8. “Costly price adjustment” Price changes themselves incur costs (called “menu costs”) 9. “Hierarchy” Internal layers of management bureaucracy impose delays in decision making 10. “Coordination failure” “Firms

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 15, 2004

There are no references for this article.

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 12 million articles from more than
10,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Unlimited reading

Read as many articles as you need. Full articles with original layout, charts and figures. Read online, from anywhere.

Stay up to date

Keep up with your field with Personalized Recommendations and Follow Journals to get automatic updates.

Organize your research

It’s easy to organize your research with our built-in tools.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve Freelancer

DeepDyve Pro

Price
FREE
$49/month

$360/year
Save searches from Google Scholar, PubMed
Create lists to organize your research
Export lists, citations
Read DeepDyve articles
Abstract access only
Unlimited access to over
18 million full-text articles
Print
20 pages/month
PDF Discount
20% off