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New Product Introductions and Price Markups

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Author Info

  • Kostas Axarloglou

    ()
    (ALBA
    Democritus University of Thrace)

  • Demetrios Tsapralis

    (J.P. Morgan & Co.)

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    Abstract

    The present study contributes to the literature of countercyclical price markups (real price rigidities). Specifically, it discusses the relation between new product introductions and industry and aggregate demand fluctuations, as well as their impact on firms' pricing policies, and in particular on price markups. Devinney [1990] shows that the introduction of new products happens mostly at the beginning of the business cycle, while Axarloglou [2003] explores the seasonal and non-seasonal properties of new product introductions in U.S. manufacturing. The present study extends this literature by showing that price markups decline in response to new product introductions, and since new product introductions vary in a procyclical manner, price markups can be countercyclical.

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    File URL: http://college.holycross.edu/RePEc/eej/Archive/Volume30/V30N2P223_235.pdf
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    Bibliographic Info

    Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

    Volume (Year): 30 (2004)
    Issue (Month): 2 (Spring)
    Pages: 223-235

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    Handle: RePEc:eej:eeconj:v:30:y:2004:i:2:p:223-235

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    Postal: c/o Dr. Alexandre Olbrecht, The Anisfield School of Business 205, Ramapo College, 505 Ramapo Valley Road, Ramapo, New Jersey 07430, USA
    Phone: (201) 684-7346
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    Web page: http://www.ramapo.edu/eea/journal.html
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    Related research

    Keywords: Prices;

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    Cited by:
    1. Kostas Axarloglou, 2007. "Thick markets, market competition and pricing dynamics: evidence from retailers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 669-677.

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