Price Stickiness: A Post Keynesian Microeconomic Perspective
AbstractThis paper explores price stickiness from a Post Keynesian microeconomic perspective. A realist interpretation of Post Keynesian pricing theory is put forward. In seeking to empirically re-examine this theory, and consistent with an open-system epistemology, both descriptive and statistical analysis of a sample of data drawn from UK manufacturing firms is undertaken. It is argued that the results offer support for the Post Keynesian perspective that price stickiness is a normal feature of business activity. The results show that pricing stability is actively sought, that firms are interested in long-run pursuit of objectives including goodwill, and that firms set prices with reference to their competitors by following mark-up pricing mechanisms. To the limited extent that firms do change their prices in response to changes in their environment then, in addition to this being understood as a contingency, once again the key features of the Post Keynesian accounts are important: Mark-up pricing methods, with mark ups set to take account of competitors' prices.
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Bibliographic InfoArticle provided by Eastern Economic Association in its journal Eastern Economic Journal.
Volume (Year): 27 (2001)
Issue (Month): 2 (Spring)
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Phone: (201) 684-7346
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Firm; Firms; Manufacturing; Post Keynesian; Pricing;
Find related papers by JEL classification:
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
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