Price Stickiness and Customer Antagonism

Aggregate Price Stickiness

We accomplish two tasks to characterize aggregate price stickiness in this paper. First, we endogenize β, the fraction of the firms keeping their price unchanged following a money supply shock in the near-rationality model (Akerlof and Yellen, 1985) by introducing a distribution of price-adjustment barriers among the firms into the near-rationality model. Second, as β can be considered an indic...

Price Stickiness in Ss Models: Basic Properties

What is the relation between infrequent price adjustment and the dynamic response of the aggregate price level to monetary shocks? Caplin and Spulber (1987) provide a stark example where the answer is “none.” It is well known that by relaxing their limit assumptions some price stickiness is regained but, to our knowledge, there are no general results on this issue. In this paper we study the re...

Reference Price Shifts and Customer Antagonism: Evidence from Reviews for Online Auctions

Based on data from a large-scale sales campaign on eBay, I show that successful auction customers punish the seller through unfavorable public feedback when they later learn about a cheaper fixed price offer. The probability of such feedback is four times as big for auction customers as for customers who bought the same item from the same seller for the fixed price. Remarkably, this probability...

Price Cues and Customer Price Knowledge

Retail Price Stickiness, Market Structure and Distribution Channels

Using Japanese scanner data of transaction prices and sales for more than 1,600 commodity groups from 1988 to 2008, we find a statistically significant negative correlation between the frequency of price changes and the degree of market concentration. We also find that structural factors of a distribution channel are significantly correlated with rigidity in retail prices. Decomposing the frequ...