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| Title: | Why are prices sticky? the dynamics of wholesale gasoline prices |
| Author (s): | Davis, Michael Hamilton, James |
| Department/Lab Affiliations: | Economics & Finance |
| Keywords: | menu cost price adjustment sticky prices |
| Issue Date: | 2004 |
| Publisher: | Blackwell Publishing / Ohio State University |
| Abstract: | The menu-cost interpretation of sticky prices implies that the probability of a price change should depend on the past history of prices and fundamentals only through the gap between the current price and the frictionless price. We find that this prediction is broadly consistent with the behavior of nine Philadelphia gasoline wholesalers. Nevertheless, we reject the menu-cost model as a literal description of these firms' behavior, arguing instead that price stickiness arises from strategic considerations of how customers and competitors will react to price changes. |
| Type: | Article - Journal text |
| In Title: | Journal of Money, Credit and Banking |
| Copyright Notice: | This material is presented to ensure timely dissemination of scholarly and technical work. Copyright and all rights therein are retained by authors or by other copyright holders. All persons copying this information are expected to adhere to the terms and constraints invoked by each author's copyright. In most cases, these works may not be reposted without the explicit permission of the copyright holder. FULL COPYRIGHT INFORMATION: |
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| title | Why are prices sticky? the dynamics of wholesale gasoline prices |
| contributor.author | Davis, Michael |
| contributor.author | Hamilton, James |
| contributor.deptlab | Economics & Finance |
| subject | menu cost |
| subject | price adjustment |
| subject | sticky prices |
| date.issued | 2004 |
| publisher | Blackwell Publishing / Ohio State University |
| identifier.pub.URI | |
| description.abstract | The menu-cost interpretation of sticky prices implies that the probability of a price change should depend on the past history of prices and fundamentals only through the gap between the current price and the frictionless price. We find that this prediction is broadly consistent with the behavior of nine Philadelphia gasoline wholesalers. Nevertheless, we reject the menu-cost model as a literal description of these firms' behavior, arguing instead that price stickiness arises from strategic considerations of how customers and competitors will react to price changes. |
| type | Article - Journal |
| type.DCMIType | text |
| type.status | Postprint |
| rights | This material is presented to ensure timely dissemination of scholarly and technical work. Copyright and all rights therein are retained by authors or by other copyright holders. All persons copying this information are expected to adhere to the terms and constraints invoked by each author's copyright. In most cases, these works may not be reposted without the explicit permission of the copyright holder. |
| rights.URI | |
| rights.URI | |
| relation.isPartOf | Journal of Money, Credit and Banking |
| date.accessioned | 2007-04-11T17:00:48Z |
| date.available | 2008-04-09T21:47:56Z |
| identifier.persist.URI |