The (Q,S,s) Pricing Rule: A Quantitative Analysis∗
نویسندگان
چکیده
Are nominal prices sticky because menu costs prevent sellers from continuously adjusting their prices to keep up with inflation or because search frictions make sellers indifferent to any real price over some non-degenerate interval? The paper answers the question by developing and calibrating a model in which both search frictions and menu costs may generate price stickiness and sellers are subject to idiosyncratic shocks. The equilibrium of the calibrated model is such that sellers follow a (Q,S,s) pricing rule: each seller lets inflation erode the effective real value of the nominal prices until it reaches some point s and then pays the menu cost and sets a new nominal price with an effective real value drawn from a distribution with support [S,Q], with s < S < Q. Idiosyncratic shocks short-circuit the repricing cycle and may lead to negative price changes. The calibrated model reproduces closely the properties of the empirical price and price-change distributions. The calibrated model implies that search frictions are the main source of nominal price stickiness. JEL Codes: D11, D21, D43, E32.
منابع مشابه
Optimal (R, Q) policy and pricing for two-echelon supply chain with lead time and retailer’s service-level incomplete information
Many studies focus on inventory systems to analyze different real-world situations. This paper considers a two-echelon supply chain that includes one warehouse and one retailer with stochastic demand and an up-to-level policy. The retailer’s lead time includes the transportation time from the warehouse to the retailer that is unknown to the retailer. On the other hand, the warehouse is unaware ...
متن کاملThe (Q,S,s) Pricing Rule∗
We introduce menu costs in the search-theoretic model of imperfect competition of Burdett and Judd (1983). When menu costs are not too large, the equilibrium is such that sellers follow a (Q,S,s) pricing rule. According to the rule, a seller lets inflation erode the real value of its nominal price until it reaches some point s. Then, the seller pays the menu cost and resets the real value of it...
متن کاملQuantitative models for determining prices in a remanufacturing system with exclusive and competitive market structure
Remanufacturing is an industrial process that makes used products reusable. Remanufacturing is a way to establish a closed-loop supply chain. One of the important aspects in both reverse logistics and remanufacturing is pricing of returned and remanufactured products (called cores) that it has been noticed in this paper. In addition, in this paper the researchers have tried to present a mathema...
متن کاملQuantitative analysis of thermo-mechanical behavior in 414 stainless steel using flow curves and processing maps
The hot deformation behavior of a typical martensitic stainless steel containing 2.1% Ni was investigated by means of the compression test in the strain rate range of 0.001-1 s-1 and temperature range of 950-1150 °C. The flow behavior of the steel was evaluated using the flow stress curves and flow softening map and by microstructural investigation. Taking into account of the strain effect on t...
متن کامل