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Price Rigidity and Industrial Concentration: Evidence from the Indonesian Food and Beverages Industry

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  • Maman Setiawan
  • Grigorios Emvalomatis
  • Alfons Oude Lansink

Abstract

type="main"> This paper investigates the relationship between industrial concentration and price rigidity in the Indonesian food and beverages industry. A Cournot model of firm behavior is used in which prices adjust according to a partial adjustment mechanism. The model is applied to panel data of the Indonesian food and beverages industry over the period 1995–2006. The results suggest that industrial concentration has a positive effect on percentage price changes. Furthermore, the speed of price adjustment is higher when the per unit cost of production rises.

Suggested Citation

  • Maman Setiawan & Grigorios Emvalomatis & Alfons Oude Lansink, 2015. "Price Rigidity and Industrial Concentration: Evidence from the Indonesian Food and Beverages Industry," Asian Economic Journal, East Asian Economic Association, vol. 29(1), pages 61-72, March.
    • Handle: RePEc:bla:asiaec:v:29:y:2015:i:1:p:61-72
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    File URL: http://hdl.handle.net/10.1111/asej.12047
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    References listed on IDEAS

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    Cited by:

    1. G. R. Chen, 2016. "Dynamic Model for Market Competition and Price Rigidity," Applied Economics, Taylor & Francis Journals, vol. 48(36), pages 3485-3496, August.
    2. Maman Setiawan & Grigorios Emvalomatis & Alfons Oude Lansink, 2013. "Structure, conduct, and performance: evidence from the Indonesian food and beverages industry," Empirical Economics, Springer, vol. 45(3), pages 1149-1165, December.
    3. Romero, Jaime & Cruz-Roche, Ignacio & Charron, Jean-Philippe, 2020. "The myth of price convergence under economic integration: A proposed explanation for the difference in food prices across European countries," European Management Journal, Elsevier, vol. 38(2), pages 267-276.

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