Modeling oligopolistic price adjustment in micro level panel data

Arbeitspapier

Consumer prices in many markets are persistently dispersed both across retail outlets and over time. While the cross sectional distribution of prices is stable, individual stores change their position in the distribution over time. It is a challenge to model oligopolistic price adjustment to capture these features of consumer markets. In belief based models of price adjustment stores react to expected profits. The expectations are based on the observed vector of market prices in the previous periods. In a reinforcement model of price adjustment, if a strategy has proven fruitful in the past, it is apt to be the strategy relied upon at the present. We collect price data on a homogeneous consumer product in Israel. We estimate the structural parameter of the models. We find that the reinforcement model describes the data better than the belief based models.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. FS IV 02-24

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Design of Experiments: Laboratory, Individual ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Subject: Experiments ; Information ; Learning

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bracht, Jürgen ; Lach, Saul ; Winter, Eyal
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/51038
• Last update: 10.03.2025, 11:44 AM CET