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Sticky prices: why firms hesitate to adjust the price of their goods

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Author Info

  • Pinelopi Goldberg
  • Rebecca Hellerstein

Abstract

Price stickiness—the tendency of prices to remain constant despite changes in supply and demand—has been linked to firms’ unwillingness to pay the costs entailed in setting, implementing, and advertising new prices. However, there is little consensus on the size and importance of these “repricing costs.” Taking the imported beer market as their subject, the authors of this study find repricing costs to be markedly higher for manufacturers than for retailers and conclude that, at the wholesale level, these costs are a significant deterrent to price adjustment.

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Bibliographic Info

Article provided by Federal Reserve Bank of New York in its journal Current Issues in Economics and Finance.

Volume (Year): 13 (2007)
Issue (Month): Nov ()
Pages:

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Handle: RePEc:fip:fednci:y:2007:i:nov:n:v.13no.10

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Related research

Keywords: Prices ; Supply and demand ; Beer industry;

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Cited by:
  1. Andrew T. Young & Daniel Levy, 2011. "Explicit Evidence on an Implicit Contract," Working Papers 2011-17, Department of Economics, Bar-Ilan University.
  2. Hellerstein, Rebecca, 2008. "Who bears the cost of a change in the exchange rate? Pass-through accounting for the case of beer," Journal of International Economics, Elsevier, vol. 76(1), pages 14-32, September.

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