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New Product Introductions and Price Markups

Author

Listed:
  • Kostas Axarloglou

    () (ALBA
    Democritus University of Thrace)

  • Demetrios Tsapralis

    (J.P. Morgan & Co.)

Abstract

The present study contributes to the literature of countercyclical price markups (real price rigidities). Specifically, it discusses the relation between new product introductions and industry and aggregate demand fluctuations, as well as their impact on firms' pricing policies, and in particular on price markups. Devinney [1990] shows that the introduction of new products happens mostly at the beginning of the business cycle, while Axarloglou [2003] explores the seasonal and non-seasonal properties of new product introductions in U.S. manufacturing. The present study extends this literature by showing that price markups decline in response to new product introductions, and since new product introductions vary in a procyclical manner, price markups can be countercyclical.

Suggested Citation

  • Kostas Axarloglou & Demetrios Tsapralis, 2004. "New Product Introductions and Price Markups," Eastern Economic Journal, Eastern Economic Association, vol. 30(2), pages 223-235, Spring.
  • Handle: RePEc:eej:eeconj:v:30:y:2004:i:2:p:223-235
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume30/V30N2P223_235.pdf
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    Citations

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    Cited by:

    1. Kostas Axarloglou, 2007. "Thick markets, market competition and pricing dynamics: evidence from retailers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 669-677.

    More about this item

    Keywords

    Prices;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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