Asymmetric Price Adjustment in the Small
Copyright policy )Asymmetric Price Adjustment in the Small
Analyzing a large weekly retail transaction price dataset, we uncover a surprising regularity - small price increases occur more frequently than small price decreases for price changes of up to about 10 cents, while there is no such asymmetry for larger price changes. The asymmetry holds for the entire sample and for individual categories. We find that while inflation can explain some of the asymmetry, inflation is not the whole story as the asymmetry holds even after excluding inflationary periods from the data, and even for products whose price had not increased over the eight-year period. The findings hold for different measures of inflation and also after allowing for lagged price adjustments. We offer a consumer-based explanation for these findings.
- University of Kentucky United States
- The University of Texas System United States
- University of Minnesota System United States
- Emory University United States
- Bar-Ilan University Israel
Size Distribution of Firms, Rational inattention, E31 - Price Level, Asymmetric price adjustment, Deflation, Monetary Policy, and Market Structure, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, Asymmetric Price Adjustment; Price Rigidity; Rational Inattention; Rational Ignorance;, D80 - General, E31, D11, ddc:330, M31, D11 - Consumer Economics: Theory, M31 - Marketing, L11, Asymmetric Price Adjustment, Industrial Price Indices, L16, Inflation, Rational Inattention, Price Rigidity, Asymmetric Price Adjustment, Price Rigidity, D80, D21 - Firm Behavior: Theory, [SHS] Humanities and Social Sciences, [SHS.GESTION] Humanities and Social Sciences/Business administration, Pricing, Price rigidity, D21, L16 - Industrial Organization and Macroeconomics: Industrial Structure and Structural Change, L11 - Production, jel: jel:D80, jel: jel:D21, jel: jel:D11, jel: jel:E31, jel: jel:L11, jel: jel:M31, jel: jel:L16
Size Distribution of Firms, Rational inattention, E31 - Price Level, Asymmetric price adjustment, Deflation, Monetary Policy, and Market Structure, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, Asymmetric Price Adjustment; Price Rigidity; Rational Inattention; Rational Ignorance;, D80 - General, E31, D11, ddc:330, M31, D11 - Consumer Economics: Theory, M31 - Marketing, L11, Asymmetric Price Adjustment, Industrial Price Indices, L16, Inflation, Rational Inattention, Price Rigidity, Asymmetric Price Adjustment, Price Rigidity, D80, D21 - Firm Behavior: Theory, [SHS] Humanities and Social Sciences, [SHS.GESTION] Humanities and Social Sciences/Business administration, Pricing, Price rigidity, D21, L16 - Industrial Organization and Macroeconomics: Industrial Structure and Structural Change, L11 - Production, jel: jel:D80, jel: jel:D21, jel: jel:D11, jel: jel:E31, jel: jel:L11, jel: jel:M31, jel: jel:L16
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