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Product Cycles and Prices:Search Foundation

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  • Yuki Teranishi

    (Keio University)

Abstract

This paper develops a price model with search foundation based on product cycles and prices. Observations conclude that firms match with a new product, then set a new price with negotiation and fix the price until the product exits from a market. This evident behavior brings a new model of price stickiness as a Search-based Phillips curve. The model includes a New Keynesian Phillips curve with the Calvo mechanism as a special case and describes new features. First, new parameters related to product entry and product exit play important roles for price dynamics. Second, such parameters for price stickiness directly appear on an expected price and lagged price.

Suggested Citation

  • Yuki Teranishi, 2017. "Product Cycles and Prices:Search Foundation," UTokyo Price Project Working Paper Series 079, University of Tokyo, Graduate School of Economics.
    • Handle: RePEc:upd:utppwp:079
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    Cited by:

    1. Mei Dong & Toshiaki Shoji & Yuki Teranishi, 2020. "Search and Matching in Rental Housing Market," Working Papers on Central Bank Communication 015, University of Tokyo, Graduate School of Economics.

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    Keywords

    Phillips curve; search and matching;

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