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Staggering and Synchronization in Price-Setting: Evidence from Multiproduct Firms

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  • Lach, Saul
  • Tsiddon, Daniel

Abstract

Theoretical work on price-setting behavior focuses on the single-product case while, in reality, a single price-setter sells many products. The authors use retail store-level multiproduct pricing data to learn about price dynamics. They find that, while the timing of a product's price changes is staggered across stores selling the same product, the timing of the price changes of different products sold within the same store is highly synchronized. This finding validates the usual assumption that decisions are staggered across price-setters and suggests that price rigidity is due mostly to 'mechanical' reasons and not to informational asymmetries. Copyright 1996 by American Economic Association.

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  • Lach, Saul & Tsiddon, Daniel, 1996. "Staggering and Synchronization in Price-Setting: Evidence from Multiproduct Firms," American Economic Review, American Economic Association, vol. 86(5), pages 1175-1196, December.
  • Handle: RePEc:aea:aecrev:v:86:y:1996:i:5:p:1175-96
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    References listed on IDEAS

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    1. Eden, Benjamin, 1994. "The Adjustment of Prices to Monetary Shocks When Trade Is Uncertain and Sequential," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 493-509, June.
    2. Lucas, Robert E, Jr, 1973. "Some International Evidence on Output-Inflation Tradeoffs," American Economic Review, American Economic Association, vol. 63(3), pages 326-334, June.
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    4. Rafael Rob, 1991. "Learning and Capacity Expansion under Demand Uncertainty," Review of Economic Studies, Oxford University Press, vol. 58(4), pages 655-675.
    5. Eytan Sheshinski & Yoram Weiss, 1992. "Staggered and Synchronized Price Policies Under Inflation: The Multiproduct Monopoly Case," Review of Economic Studies, Oxford University Press, vol. 59(2), pages 331-359.
    6. Roland Benabou, 1988. "Search, Price Setting and Inflation," Review of Economic Studies, Oxford University Press, vol. 55(3), pages 353-376.
    7. Eytan Sheshinski & Yoram Weiss, 1992. "Staggered and Synchronized Price Policies Under Inflation: The Multiproduct Monopoly Case," Review of Economic Studies, Oxford University Press, vol. 59(2), pages 331-359.
    8. Daniel Tsiddon, 1993. "The (Mis)Behaviour of the Aggregate Price Level," Review of Economic Studies, Oxford University Press, vol. 60(4), pages 889-902.
    9. Robert E. Lucas, Jr. & Michael Woodford, 1993. "Real Effects of Monetary Shocks in an Economy with Sequential Purchases," NBER Working Papers 4250, National Bureau of Economic Research, Inc.
    10. Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
    11. Agn├Ęs Sulem, 1986. "Explicit Solution of a Two-Dimensional Deterministic Inventory Problem," Mathematics of Operations Research, INFORMS, vol. 11(1), pages 134-146, February.
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