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Heterogeneity in Consumer Price Stickiness: A Microeconometric Investigation

  • Fougere, Denis
  • Le Bihan, Herve
  • Sevestre, Patrick

This paper examines heterogeneity in price stickiness using a large, original, set of individual price data collected at the retail level for the computation of the French CPI. For that purpose, we estimate at a very high level of disaggregation competing-risks duration models that distinguish between price increases, price decreases and product replacements. The main findings are the following: i) cross-product and cross-outlet-type heterogeneity is pervasive, both in the shape of the hazard function and in the impact of covariates; ii) at the product-outlet type level, the baseline hazard function of a price spell is non-decreasing; iii) there is strong evidence of state dependence, especially for price increases.

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Article provided by American Statistical Association in its journal Journal of Business and Economic Statistics.

Volume (Year): 25 (2007)
Issue (Month): (July)
Pages: 247-264

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Handle: RePEc:bes:jnlbes:v:25:y:2007:p:247-264
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