Asking About Prices: A New Approach to Understanding Price Stickiness
Russell Sage Foundation, 8 janv. 1998 - 400 pages
Why do consumer prices and wages adjust so slowly to changes in market conditions? The rigidity or stickiness of price setting in business is central to Keynesian economic theory and a key to understanding how monetary policy works, yet economists have made little headway in determining why it occurs. Asking About Prices offers a groundbreaking empirical approach to a puzzle for which theories abound but facts are scarce. Leading economist Alan Blinder, along with co-authors Elie Canetti, David Lebow, and Jeremy B. Rudd, interviewed a national, multi-industry sample of 200 CEOs, company heads, and other corporate price setters to test the validity of twelve prominent theories of price stickiness. Using everyday language and pertinent scenarios, the carefully designed survey asked decisionmakers how prominently these theoretical concerns entered into their own attitudes and thought processes. Do businesses tend to view the costs of changing prices as prohibitive? Do they worry that lower prices will be equated with poorer quality goods? Are firms more likely to try alternate strategies to changing prices, such as warehousing excess inventory or improving their quality of service? To what extent are prices held in place by contractual agreements, or by invisible handshakes? Asking About Prices offers a gold mine of previously unavailable information. It affirms the widespread presence of price stickiness in American industry, and offers the only available guide to such business details as what fraction of goods are sold by fixed price contract, how often transactions involve repeat customers, and how and when firms review their prices. Some results are surprising: contrary to popular wisdom, prices do not increase more easily than they decrease, and firms do not appear to practice anticipatory pricing, even when they can foresee cost increases. Asking About Prices also offers a chapter-by-chapter review of the survey findings for each of the twelve theories of price stickiness. The authors determine which theories are most popular with actual price setters, how practices vary within different business sectors, across firms of different sizes, and so on. They also direct economists' attention toward a rationale for price stickiness that does not stem from conventional theory, namely a strong reluctance by firms to antagonize or inconvenience their customers. By illuminating how company executives actually think about price setting, Asking About Prices provides an elegant model of a valuable new approach to conducting economic research.
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Constant Marginal Cost
Costs of Adjusting Prices
Hierarchy 2 5 3
What Have We Learned?
Appendix A Manufacturing Interview
Appendix B List of Variable Names
Autres éditions - Tout afficher
adjustment costs answer Blinder business cycle change prices chapter companies coordination failure cost changes cost increases cost shocks cost-based pricing costs of price countercyclical cyclically sensitive decreases delivery lags demand curve demand shocks economic economists elasticity of demand expect explain ﬁgure ﬁnal ﬁnd ﬁnding ﬁrm’s ﬁrms ﬁrst ﬁve ﬂat FLATMC Fraction of sales idea implicit contracts industry inﬂation interviews inventories judging quality kinked demand manufacturing marginal cost markups MCPCT Mean response menu costs money illusion nominal contracts nonprice competition ordered probit ordered probit model output percent Percentage of Firms price adjustment price changes price cuts price increases price rigidity price stickiness pricing points probit model procyclical production proﬁts psychological pricing quality by price question questionnaire raise prices rate the theory RATION regression response rate retail sample sector slowing down price source of price Speciﬁcally sticky prices theory of price tion twelve theories variables wage