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
Springer Journals
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 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

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