Durability versus concentration as an explanation for price inflexibility

Elizabeth M. Caucutt, Mrinal Ghosh, Christina M.L. Kelton

Research output: Contribution to journalArticle

18 Scopus citations

Abstract

We document the extent of price rigidity across United States manufacturing industries in the 1980s and early 1990s and compare rigidity across different phases of the business cycle. We measure price rigidity in three ways - each under four different sets of assumptions. We take an approach that relies on disaggregated data; we look at price patterns for over 4000 individual manufactured commodities. Both durability and seller concentration are found to be important factors explaining differences in price rigidity across industrial product classes. Using our data, we replicate the regression results found in Carlton (1986) that were based on actual transaction prices from the 1960s.

Original languageEnglish (US)
Pages (from-to)27-50
Number of pages24
JournalReview of Industrial Organization
Volume14
Issue number1
DOIs
StatePublished - 1999

Keywords

  • Administered pricing
  • Market concentration
  • Price rigidity
  • Product durability

ASJC Scopus subject areas

  • Economics and Econometrics
  • Strategy and Management
  • Organizational Behavior and Human Resource Management
  • Management of Technology and Innovation

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