When Do Firms Adjust Prices? Evidence from Micro Panel Data PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download When Do Firms Adjust Prices? Evidence from Micro Panel Data PDF full book. Access full book title When Do Firms Adjust Prices? Evidence from Micro Panel Data by Sarah M. Lein. Download full books in PDF and EPUB format.
Author: Sarah M. Lein
Publisher:
ISBN:
Category :
Languages : en
Pages : 57
Get Book Here
Book Description
The price-setting behavior of manufacturing firms is examined using a large panel of quarterly firm survey data from 1984 to 2007, which allows changes in firms' prices to be linked to several firm-specific variables. The results show that state-dependent pricing is clearly present in a low-inflation environment and that variables measuring the current situation of the firm, especially costs for intermediate products, are important determinants of price adjustments. Compared to purely time-dependent features, the state-dependent variables significantly add to the explanatory power of a price adjustment probability model. Macroeconomic factors are significant but contribute little in terms of the goodness of fit. Furthermore, when taking into account sticky plan models by excluding possibly predetermined price changes, the importance of state-dependent factors becomes even greater.
Author: Sarah M. Lein
Publisher:
ISBN:
Category :
Languages : en
Pages : 57
Get Book Here
Book Description
The price-setting behavior of manufacturing firms is examined using a large panel of quarterly firm survey data from 1984 to 2007, which allows changes in firms' prices to be linked to several firm-specific variables. The results show that state-dependent pricing is clearly present in a low-inflation environment and that variables measuring the current situation of the firm, especially costs for intermediate products, are important determinants of price adjustments. Compared to purely time-dependent features, the state-dependent variables significantly add to the explanatory power of a price adjustment probability model. Macroeconomic factors are significant but contribute little in terms of the goodness of fit. Furthermore, when taking into account sticky plan models by excluding possibly predetermined price changes, the importance of state-dependent factors becomes even greater.
Author: Alan Blinder
Publisher: Russell Sage Foundation
ISBN: 1610440684
Category : Business & Economics
Languages : en
Pages : 412
Get Book Here
Book Description
Why do consumer prices and wages adjust so slowly to changes in market conditions? The rigidity or stickiness of price setting in business is central to Keynesian economic theory and a key to understanding how monetary policy works, yet economists have made little headway in determining why it occurs. Asking About Prices offers a groundbreaking empirical approach to a puzzle for which theories abound but facts are scarce. Leading economist Alan Blinder, along with co-authors Elie Canetti, David Lebow, and Jeremy B. Rudd, interviewed a national, multi-industry sample of 200 CEOs, company heads, and other corporate price setters to test the validity of twelve prominent theories of price stickiness. Using everyday language and pertinent scenarios, the carefully designed survey asked decisionmakers how prominently these theoretical concerns entered into their own attitudes and thought processes. Do businesses tend to view the costs of changing prices as prohibitive? Do they worry that lower prices will be equated with poorer quality goods? Are firms more likely to try alternate strategies to changing prices, such as warehousing excess inventory or improving their quality of service? To what extent are prices held in place by contractual agreements, or by invisible handshakes? Asking About Prices offers a gold mine of previously unavailable information. It affirms the widespread presence of price stickiness in American industry, and offers the only available guide to such business details as what fraction of goods are sold by fixed price contract, how often transactions involve repeat customers, and how and when firms review their prices. Some results are surprising: contrary to popular wisdom, prices do not increase more easily than they decrease, and firms do not appear to practice anticipatory pricing, even when they can foresee cost increases. Asking About Prices also offers a chapter-by-chapter review of the survey findings for each of the twelve theories of price stickiness. The authors determine which theories are most popular with actual price setters, how practices vary within different business sectors, across firms of different sizes, and so on. They also direct economists' attention toward a rationale for price stickiness that does not stem from conventional theory, namely a strong reluctance by firms to antagonize or inconvenience their customers. By illuminating how company executives actually think about price setting, Asking About Prices provides an elegant model of a valuable new approach to conducting economic research.
Author: Sarah M. Rupprecht
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
Author: Michael V. Marn
Publisher: John Wiley & Sons
ISBN: 0471690023
Category : Business & Economics
Languages : en
Pages : 306
Get Book Here
Book Description
The Price Advantage by three preeminent experts at McKinsey & Company is the most pragmatic and insightful book on pricing available. Based on in-depth, first-hand experience with hundreds of companies, this book is designed to provide managers with comprehensive guidance through the maze of pricing issues. The authors demonstrate why pricing excellence is critical to corporate success and profitability, then explain state-of-the-art approaches to analyzing and improving your own pricing strategy for any product or service. Their advice is critical for readers who need to develop pricing strategies that work in both good economic times and bad.
Author: Gil Mehrez
Publisher:
ISBN:
Category :
Languages : en
Pages : 166
Get Book Here
Book Description
Author: Eytan Sheshinski
Publisher: MIT Press
ISBN: 9780262193320
Category : Business & Economics
Languages : en
Pages : 546
Get Book Here
Book Description
These collected articles constitute what is perhaps the definitive study of pricing models under inflation, providing a solid basis for further research on this elusive question. What are the real effects of inflation? These collected articles constitute what is perhaps the definitive study of pricing models under inflation, providing a solid basis for further research on this elusive question. Covering a broad range of theory and applications by well-known microeconomists, the eighteen contributions evaluate the effects of inflation on aggregate output and on welfare and reveal the scope of recent efforts to explicitly incorporate frictions in economic models. A basic building block common to most of the essays in this volume is the observation that individual firms change nominal prices intermittently. The frequency and size of nominal price changes are influenced by the cost of price adjustment and changes in the economic environment, production costs, market demand, market structure, and most important, inflation. Thus the degree of nominal rigidity is influenced by the economic environment, and in a dynamic context. Two introductory essays survey the empirical studies of pricing policies by individual firms and the theoretical efforts to integrate the nominal rigidities at the micro level into macro relationships. The essays that follow treat the general problem of optimal dynamic adjustment in the presence of convex costs of adjustment, include applications of the inventory models to the case of nominal price adjustment by an individual firm, address the question of aggregation, introduce active search by consumers, and provide empirical analysis of nominal price rigidities.
Author: Silvia Fabiani
Publisher: OUP USA
ISBN: 0195309286
Category : Business & Economics
Languages : en
Pages : 309
Get Book Here
Book Description
This book collects results from ad hoc surveys on firms pricing behavior conducted in 2003 and 2004 by nine National central banks of the Euro area in the context of a joint research project (Eurosystem Inflation Persistence Network). These surveys have proved to be an efficient way to test theories on the pricing strategies of economic agents, documenting, in qualitative terms, the underlying rationale of the observed pricing patterns. The book provides an unprecedented amount of information from more than 11,000 euro area firms, addressing issues such as the relevance of nominal and real rigidities, the information set used by firms in the price setting process, the strategy followed to review prices, the frequency of both price reviews and price changes, the reasons underlying price stickiness, and asymmetries in price adjustment. It also compares results for the euro area to those obtained for other countries by similar studies. Finally, it draws the main implications for theoretical modeling and for monetary policy.
Author: Vinay Couto
Publisher: John Wiley & Sons
ISBN: 1119268532
Category : Business & Economics
Languages : en
Pages : 296
Get Book Here
Book Description
A practical approach to business transformation Fit for Growth* is a unique approach to business transformation that explicitly connects growth strategy with cost management and organization restructuring. Drawing on 70-plus years of strategy consulting experience and in-depth research, the experts at PwC’s Strategy& lay out a winning framework that helps CEOs and senior executives transform their organizations for sustainable, profitable growth. This approach gives structure to strategy while promoting lasting change. Examples from Strategy&’s hundreds of clients illustrate successful transformation on the ground, and illuminate how senior and middle managers are able to take ownership and even thrive during difficult periods of transition. Throughout the Fit for Growth process, the focus is on maintaining consistent high-value performance while enabling fundamental change. Strategy& has helped major clients around the globe achieve significant and sustained results with its research-backed approach to restructuring and cost reduction. This book provides practical guidance for leveraging that expertise to make the choices that allow companies to: Achieve growth while reducing costs Manage transformation and transition productively Create lasting competitive advantage Deliver reliable, high-value performance Sustainable success is founded on efficiency and high performance. Companies are always looking to do more with less, but their efforts often work against them in the long run. Total business transformation requires total buy-in, and it entails a series of decisions that must not be made lightly. The Fit for Growth approach provides a clear strategy and practical framework for growth-oriented change, with expert guidance on getting it right. *Fit for Growth is a registered service mark of PwC Strategy& Inc. in the United States
Author: Mansoor Muallim
Publisher: M M Info Care
ISBN:
Category : Business & Economics
Languages : en
Pages : 138
Get Book Here
Book Description
Chapter 1: Understanding the Importance of Pricing Strategies Jammy: Hello, Canny! I'm thrilled to have this candid conversation with you about pricing strategies. They play a vital role in the success of any business, and I believe it's essential to understand their importance. Canny: Hi, Jammy! I'm equally excited to learn more about pricing strategies. I've always wondered how businesses decide on the prices of their products and services. Jammy: Well, Canny, pricing strategies are more than just putting a number on a product. They can make or break a business. Effective pricing can boost sales, increase profits, and even create a competitive advantage. Canny: That's fascinating! But how do companies determine the right price for their offerings? Jammy: Excellent question, Canny! Companies consider various factors. First and foremost, they analyze their production and operating costs to ensure they cover expenses while making a profit. They also look at the demand for their products and how customers perceive the value. Canny: I see. So, it's not just about covering costs, but also understanding what customers are willing to pay. Jammy: Absolutely! Pricing is a delicate balancing act. If a company prices too high, they may lose customers to competitors. On the other hand, if the price is too low, they might miss out on potential profits. Canny: It sounds like finding the right pricing strategy is crucial. Are there different types of pricing strategies that companies use? Jammy: Yes, indeed! Companies employ various pricing strategies depending on their goals and the market they operate in. Some common ones include cost-plus pricing, market-oriented pricing, and competitive pricing. Canny: What's cost-plus pricing? Jammy: Cost-plus pricing involves adding a markup to the production cost to set the selling price. It ensures that the company covers all expenses and includes a margin for profit. Canny: And market-oriented pricing? Jammy: Market-oriented pricing focuses on aligning prices with customer perceptions. Companies research their target market to understand what customers are willing to pay and set their prices accordingly. Canny: I see how that can be effective. What about competitive pricing? Jammy: Competitive pricing is all about analyzing what competitors are charging for similar products and setting prices accordingly. It allows companies to stay competitive in the market. Canny: These strategies sound interesting! Is there more to pricing than just setting a number? Jammy: Absolutely! Pricing strategies involve in-depth research, analysis, and continuous monitoring. Companies also need to consider psychological factors that influence customer behavior, like pricing perception and the impact of discounts. Canny: It seems like pricing is a complex but essential aspect of running a business. Jammy: You're absolutely right, Canny! The right pricing strategy can lead to increased sales, higher profits, and long-term success. On the other hand, poor pricing decisions can have severe consequences. Canny: Thank you, Jammy! This conversation has been enlightening. I now understand why pricing strategies are so crucial for businesses. Key Takeaways: Pricing strategies are vital for the success of any business, as they can impact sales, profits, and competitive advantage. Effective pricing involves balancing production costs, customer perceptions, and market demand. Different pricing strategies, such as cost-plus pricing, market-oriented pricing, and competitive pricing, serve various business goals. Psychological factors and the impact of discounts also play a role in pricing decisions. Thorough research, analysis, and continuous monitoring are essential in formulating successful pricing strategies.
Author: Gita Gopinath
Publisher:
ISBN:
Category : Foreign exchange rates
Languages : en
Pages : 51
Get Book Here
Book Description
A common finding across empirical studies of price adjustment is that there is large heterogeneity in the frequency of price adjustment. However, there is little evidence of how distant prices are from the desired flexible price. Without this evidence, it is difficult to discern what the frequency measure implies for the transmission of shocks or to understand why some firms adjust more frequently than others. We exploit the open economy environment, which provides a well-identified and sizeable cost shock namely the exchange rate shock to shed light on these questions. First, we empirically document that high frequency adjusters have a long-run pass-through that is at least twice as high as low frequency adjusters in the data. Next, we show theoretically that long-run pass-through is determined by the same primitives that shape the curvature of the profit function and, hence, also affect frequency. In an environment with variable mark-ups or variable marginal costs, theory predicts a positive relation between frequency and pass-through, as documented in the data. Consequently, estimates of long-run pass-through shed light on the determinants of the duration of prices. The standard workhorse model with constant elasticity of demand and Calvo or state dependent pricing generates long-run pass-through that is uncorrelated with frequency, contrary to the data. Lastly, we calibrate a dynamic menu-cost model and show that variable mark-ups chosen to match the variation in pass-through in the data can generate substantial variation in price duration, equivalent to one third of the observed variation in the data.
