Pricing Behavior and the Introduction of the Euro: Evidence from a Panel of Restaurants in Italy
We assemble a panel of 2,500 restaurants in Italy over the period 1998-2004 to study whether, and through which channels, the introduction of euro coins and banknotes had an impact on individual pricing behaviour. We reach three conclusions. Firstly, while the evidence rejects the hypothesis that the changeover led to a “doubling of prices” in this industry, the event may have focussed public attention on the cumulative price increases which took place before the changeover, reflecting costs and demand. Secondly, the rise in the average meal price was due more to a larger proportion of restaurants revising their prices than to large individual revisions. Lastly, more local market power (as proxied by a concentration index) was associated with a larger price increase; an interpretation of the latter finding is proposed which also explains why the effects of the cash changeover were stronger in less competitive industries.
Volume (Year): 63 (2004)
Issue (Month): 3-4 (December)
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- Mark Bils & Peter J. Klenow, 2004.
"Some Evidence on the Importance of Sticky Prices,"
Journal of Political Economy,
University of Chicago Press, vol. 112(5), pages 947-985, October.
- Fabrizio Adriani & Giancarlo Marini & Pasquale Scaramozzino, 2004.
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Royal Economic Society Annual Conference 2004
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- Michael Dotsey & Robert G. King & Alexander L. Wolman, 1999. "State-Dependent Pricing and the General Equilibrium Dynamics of Money and Output," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 655-690.
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