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Dynamic Price Adjustment Under Imperfect Competition

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  • Eberwein, C.
  • To, T.
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Abstract

We study dynamic price adjustment under imperfect competition when consumers have non-time-separable preferences. In our model an intertemporal link arises in the consumers' maximization problems because current price and firms must take this into account when making their decisions. The main result is that equilibrium prices follow a dynamic stochastic process in which the current price depends on past prices and on random disturbances.

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Bibliographic Info

Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 505.

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Length: 30 pages
Date of creation: 1998
Date of revision:
Handle: RePEc:wrk:warwec:505

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Keywords: PRICING ; OLIGOPOLIES ; GENERATIONS;

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  6. repec:nbr:nberre:0126 is not listed on IDEAS
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  26. Alan S. Blinder, 1994. "On Sticky Prices: Academic Theories Meet the Real World," NBER Chapters, in: Monetary Policy, pages 117-154 National Bureau of Economic Research, Inc.
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