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Price Stickiness: A Post Keynesian Microeconomic Perspective


  • Paul Downward

    () (Division of Economics, Staffordshire University Business School)


This paper explores price stickiness from a Post Keynesian microeconomic perspective. A realist interpretation of Post Keynesian pricing theory is put forward. In seeking to empirically re-examine this theory, and consistent with an open-system epistemology, both descriptive and statistical analysis of a sample of data drawn from UK manufacturing firms is undertaken. It is argued that the results offer support for the Post Keynesian perspective that price stickiness is a normal feature of business activity. The results show that pricing stability is actively sought, that firms are interested in long-run pursuit of objectives including goodwill, and that firms set prices with reference to their competitors by following mark-up pricing mechanisms. To the limited extent that firms do change their prices in response to changes in their environment then, in addition to this being understood as a contingency, once again the key features of the Post Keynesian accounts are important: Mark-up pricing methods, with mark ups set to take account of competitors' prices.

Suggested Citation

  • Paul Downward, 2001. "Price Stickiness: A Post Keynesian Microeconomic Perspective," Eastern Economic Journal, Eastern Economic Association, vol. 27(2), pages 165-182, Spring.
  • Handle: RePEc:eej:eeconj:v:27:y:2001:i:2:p:165-182

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    More about this item


    Firm; Firms; Manufacturing; Post Keynesian; Pricing;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General


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