Price Change Synchronization within and between Firms

This paper provides evidence on price rigidity at the product- and firm-level in Norway. A strong within-firm synchronization is found supporting theory of economies scope menu costs. The industry effects are to be small suggesting that firms either have some monopoly power, or a firm’s costs changing their own prices may larger than benefit responding competitors’ changes. These findings potentially important implications for micro-foundations macroeconomic models, thus policy advice derived from such models.