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Heterogeneity in Consumer Price Stickiness : A Microeconometric Investigation

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  • Denis Fougère

    (Crest)

  • Hervé Le Bihan

    (Crest)

  • Patrick Sevestre

    (Crest)

Abstract

We examine heterogeneity in price stickiness using a large, original, setof individual price data collected at the retail level for the computationof the French CPI. For that purpose, we estimate at a very high level ofdisaggregation competing-risks duration models that distinguish betweenprice increases, price decreases and product replacements. The main ?nd-ings are the following: i ) at the product-outlet type level, the baselinehazard function of a price spell is non-decreasing ii) cross-product andcross-outlet-type heterogeneity is pervasive, both in the shape of the haz-ard function and in the impact of covariates iii ) there is strong evidence ofstate dependence, especially for price increases iv) there is an asymmetrysince determinants of price increases di¤er from those of price decreases.

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Bibliographic Info

Paper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2006-26.

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Date of creation: 2006
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Handle: RePEc:crs:wpaper:2006-26

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