Sticky Prices, Coordination, and Collusion PDF Download
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Author: John C. Driscoll
Publisher:
ISBN:
Category : Cartels
Languages : en
Pages : 14
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Book Description
New Keynesian models of price setting under monopolistic competition involve two kinds of inefficiency: the price level is too high because firms ignore an aggregate demand externality, and when there are costs of changing prices, price stickiness may be an equilibrium response to changes in nominal money even when all agents would be better off if all adjusted prices. This paper models the consequences of allowing firms to coordinate, enforcing the coordination by punishing deviators; this is equivalent to modeling firms as an implicit cartel playing a punishment game. We show that coordination can partially or fully eliminate the first kind of inefficiency, depending on the magnitude of the punishment, but cannot always remove the second. The response of prices to a monetary shock will depend on the magnitude of the punishment, and may be asymmetric. Implications for the welfare cost of fluctuations also differ from the standard monopolistic competition case
Author: John C. Driscoll
Publisher:
ISBN:
Category : Cartels
Languages : en
Pages : 14
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Book Description
New Keynesian models of price setting under monopolistic competition involve two kinds of inefficiency: the price level is too high because firms ignore an aggregate demand externality, and when there are costs of changing prices, price stickiness may be an equilibrium response to changes in nominal money even when all agents would be better off if all adjusted prices. This paper models the consequences of allowing firms to coordinate, enforcing the coordination by punishing deviators; this is equivalent to modeling firms as an implicit cartel playing a punishment game. We show that coordination can partially or fully eliminate the first kind of inefficiency, depending on the magnitude of the punishment, but cannot always remove the second. The response of prices to a monetary shock will depend on the magnitude of the punishment, and may be asymmetric. Implications for the welfare cost of fluctuations also differ from the standard monopolistic competition case
Author: John Christopher Driscoll
Publisher:
ISBN:
Category : Cartels
Languages : en
Pages : 44
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Book Description
Author: Laurence Ball
Publisher:
ISBN:
Category : Prices
Languages : de
Pages :
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Book Description
This paper shows that nominal price rigidity can arise from a failure to coordinate price changes. If a firm's desired price is increasing in others' prices, then the gains to the firm from adjusting its price after a nominal shock are greater if others adjust. This "strategic complementarity" in price adjustment can lead to multiple equilibria in the degree of nominal rigidity. Welfare may be much higher in the equilibria with less rigidity. In addition, with multiple equilibrium degrees of rigidity, the economy may have several short-run equilibria but a unique long-run equilibrium.
Author: Carlos Balseyro Rodriguez
Publisher:
ISBN:
Category :
Languages : es
Pages : 26
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Book Description
Author: John C. Driscoll
Publisher:
ISBN:
Category :
Languages : es
Pages : 14
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Book Description
Author: Scott P. Russell
Publisher:
ISBN:
Category : Gasoline
Languages : en
Pages : 126
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Book Description
In this study, I test for tacit collusion in retail gasoline markets by testing for sticky downward pricing and price leadership. Using an extensive dataset consisting of twenty-five gasoline markets located in the greater Willamette Valley region of Oregon, I find evidence of sticky downward pricing in every market. I also find strong evidence that suggests several firms are using a price leader to coordinate prices. Further analysis suggests that the firms using a price leader to coordinate prices do not earn a greater average margin when compared to firms that do not coordinate prices with a price leader. Using past estimates of own-price elasticity for retail gas stations, I project the profit-maximizing price that station could charge and find that it is below the observed price charged by every station in every market. This result suggests that the tacit collusion observed in these markets is not an attempt by gas station managers to earn anti-competitive profits.
Author: John C. Driscoll
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Author:
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 450
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Book Description
Author: Agarwala S K
Publisher: Excel Books India
ISBN: 9788174466662
Category :
Languages : en
Pages : 180
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Book Description
Microeconomics focuses on individual units like a consumer, a producer, a firm/industry, a commodity, etc. It analyses the behaviour of one market variable at a time. In microeconomics, the commodity markets are divided into perfect competitive markets and imperfect markets. 'Microeconomic Theory and Application (Part II)' deals with imperfect markets that are broadly classified into monopoly, monopolistic competition and oligopoly. Apart from this, the book also deals with the concept of factor pricing and its various aspects, in detail. This book supplements the classroom teaching and has been developed as per the syllabus of Bcom (Hons) II year course of the University of Delhi. The book would prove to be equally useful for all microeconomics courses at the graduation level across all the universities in India.
Author: Geoffrey Schneider
Publisher: Routledge
ISBN: 131726648X
Category : Business & Economics
Languages : en
Pages : 768
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Book Description
Economic Principles and Problems: A Pluralistic Introduction offers a comprehensive introduction to the major perspectives in modern economics, including mainstream and heterodox approaches. Through providing multiple views of markets and how they work, it leaves readers better able to understand and analyze the complex behaviors of consumers, firms, and government officials, as well as the likely impact of a variety of economic events and policies. Most principles of economics textbooks cover only mainstream economics, ignoring rich heterodox ideas. They also lack material on the great economists, including the important ideas of Adam Smith, Karl Marx, Thorstein Veblen, John Maynard Keynes, and Friedrich Hayek. Mainstream books tend to neglect the kind of historical analysis that is crucial to understanding trends that help us predict the future. Moreover, they focus primarily on abstract models more than existing economic realities. This engaging book addresses these inadequacies. Including explicit coverage of mainstream economics and the major heterodox schools of economic thought—institutionalists, feminists, radical political economists, post-Keynesians, Austrians, and social economists—it allows the reader to choose which ideas they find most compelling in explaining modern economic realities. Written in an engaging style and focused on real-world examples, this textbook brings economics to life. Multiple examples of how each economic model works, coupled with critical analysis of the assumptions behind them, enable students to develop a sophisticated understanding of the material. Digital supplements are also available for students and instructors. Economic Principles and Problems offers the most contemporary and complete package for any pluralist economics class.
