SOME EVIDENCE ON LUMP SUM VERSUS CONVEX COSTS OF CHANGING PRICES

Abstract

Two models in which price stickiness results from price adjustment costs are tested. One, an (s,S) pricing model, assumes lump‐sum adjustment costs and predicts firms will make relatively large, infrequent price changes. The other assumes convex adjustment costs and predicts frequent, partial price adjustments. Survey data of firms' price behavior reveal patterns consistent with the (s,S) model. However, many of the patterns are also consistent with partial‐adjustment rules, although the high percentage of firms which fix prices for a quarter or more casts doubt on the plausibility of the partial‐adjustment hypothesis.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 19 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.