Price Response, Asymmetric Information, and Competition
- Author(s)
- Joshua Sherman, Avi Weiss
- Abstract
We compare predictions from a theoretical model based on the structure of the main outdoor retail market in Jerusalem with the results of an empirical analysis of price response to changes in cost. We find that firms without adjacent competition exhibit both upward and downward price rigidity, an outcome we ascribe to asymmetric information between the consumer and the firm. Given that previous studies have focused on downward price rigidities of firms with market power, our findings highlight the importance of accounting for transitory information asymmetries between the consumer and the firm when studying price rigidity.
- Organisation(s)
- Department of Economics
- External organisation(s)
- Bar-Ilan University (BIU)
- Journal
- The Economic Journal
- Volume
- 125
- Pages
- 2077 - 2115
- No. of pages
- 39
- ISSN
- 0013-0133
- DOI
- https://doi.org/10.1111/ecoj.12178
- Publication date
- 2014
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502013 Industrial economics
- Keywords
- ASJC Scopus subject areas
- Economics and Econometrics
- Portal url
- https://ucrisportal.univie.ac.at/en/publications/1ff940d0-eee3-47f1-9760-6fc896e0c784