Inflation And Optimal Price Adjustment Under Monopolistic Competition
AbstractThis paper considers a model of a monopolistically competitive industry with a large number of firms producing imperfect substitutes. There is an exogenous inflation rate and each firm must pay a fixed cost every time it adjusts its nominal price. It is shown that, under quite general conditions, there exists a continuum of periodic and synchronized equilibria, each one associated with a different frequency of price adjustment. Consequently, the same frequency of price adjustment is compatible with a full range of inflation rates. Copyright 1992 by The London School of Economics and Political Science.
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Bibliographic InfoPaper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 90.88.
Length: 46 pages
Date of creation: 1988
Date of revision:
inflation ; monopolies ; competition ; costs ; pricing;
Other versions of this item:
- Caminal, Ramon, 1992. "Inflation and Optimal Price Adjustment under Monopolistic Competition," Economica, London School of Economics and Political Science, vol. 59(234), pages 179-97, May.
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- Carlos Borondo, 1994. "La rigidez nominal de los precios de la Nueva Economía Keynesiana: una panorámica," Investigaciones Economicas, Fundación SEPI, vol. 18(2), pages 245-288, May.
- Bhaskar, V, 2002.
"On Endogenously Staggered Prices,"
Review of Economic Studies,
Wiley Blackwell, vol. 69(1), pages 97-116, January.
- Lucke, Bernd, 1995. "Do small menu costs explain large business cycles?," Economics Letters, Elsevier, vol. 47(2), pages 185-192, February.
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