Monopolistic competition with pro- and countercyclical pricing

Arbeitspapier

We develop a market model which explains how prices react to short-run demand variations when the number of active price-setting firms is held fixed on its long-run level. We assume that for each firm the average production cost function is U-shaped, that customers are imperfectly informed about the quality of offers, and that customers may search for better offers. For low degrees of market transparency the long-run market outcome exhibits price dispersion with an endogenous finite number of firms. In this case, in the short-run, price mark-ups respond countercyclically to demand variations and productivity is procyclical. In the complementary case of higher degrees of market transparency, in the long-run we have a single-price equilibrium. In that case, in the short-run price mark-ups fall with decreasing demand while productivity diminishes with any deviation of demand from its long-run level.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Diskussionsbeiträge - Serie I ; No. 255

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Market Structure, Pricing, and Design: General ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Production, Pricing, and Market Structure; Size Distribution of Firms
• Thema: increasing returns ; monopolistic competition ; business cycle theory

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Zink, Helmut
• Ereignis: Veröffentlichung
• (wer): Universität Konstanz, Fakultät für Wirtschaftswissenschaften und Statistik
• (wo): Konstanz
• (wann): 1991

Weitere Informationen

• Handle: http://hdl.handle.net/10419/68849
• Letzte Aktualisierung: 10.03.2025, 11:41 MEZ