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Monopolistic Competition in Switzerland and Mark-up Pricing Over the Business Cycle

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  • Christian Mueller

Abstract

We investigate how firms' market power affects the price level. In our small macromodel we show, that firms - in addition to hypothesised structural mark-up pricing power - may take advantage of favourable business cycle fluctuations. The paper provides empirical evidence for both these propositions to hold. To show this, we estimate the model in a multivariate time series framework with double integrated variables. We can derive a model based business cycle indicator which compares very well with exogenous survey data information.

Suggested Citation

  • Christian Mueller, 2004. "Monopolistic Competition in Switzerland and Mark-up Pricing Over the Business Cycle," KOF Working papers 04-86, KOF Swiss Economic Institute, ETH Zurich.
    • Handle: RePEc:kof:wpskof:04-86
    DOI: 10.3929/ethz-a-004721482
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    References listed on IDEAS

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    1. repec:cup:etheor:v:8:y:1992:i:2:p:188-202 is not listed on IDEAS
    2. Johansen, Søren, 1992. "A Representation of Vector Autoregressive Processes Integrated of Order 2," Econometric Theory, Cambridge University Press, vol. 8(2), pages 188-202, June.
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