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The Timing of Purchases, Market Power, and Economic Fluctuations

Author

Listed:
  • Parker, J.A.

Abstract

This paper analyzes a market in which sellers have power market and set price taking into account the ability of buyers to time their purchases. I demonstrate that expected fluctuations in demand are inherently fluctuations in the elasticity of demand, leading to smaller markups on the up-side of booms.

Suggested Citation

  • Parker, J.A., 1997. "The Timing of Purchases, Market Power, and Economic Fluctuations," Working papers 9723, Wisconsin Madison - Social Systems.
  • Handle: RePEc:att:wimass:9723
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    File URL: http://www.ssc.wisc.edu/econ/archive/wp9723.pdf
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    References listed on IDEAS

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    1. Bruce W Hamilton & Mary Burke, 1996. "The Coase Conjecture in Continuous Time: Imperfect Durability Endogenous Durability and Aftermarkets," Economics Working Paper Archive 362, The Johns Hopkins University,Department of Economics.
    2. Basu, S.: Fernald, J.G., 1993. "Constant Returns and Small Markups in U.S. Manufacturing," Papers 93-19, Michigan - Center for Research on Economic & Social Theory.
    3. Nancy L. Stokey, 1981. "Rational Expectations and Durable Goods Pricing," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 112-128, Spring.
    4. Ricardo J. Caballero & Eduardo M. R. A. Engel & John C. Haltiwanger, 1995. "Plant-Level Adjustment and Aggregate Investment Dynamics," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(2), pages 1-54.
    5. Susanto Basu & John G. Fernald, 1995. "Aggregate Productivity and the Productivity of Aggregates," NBER Working Papers 5382, National Bureau of Economic Research, Inc.
    6. Mortensen, Dale T., 1994. "The cyclical behavior of job and worker flows," Journal of Economic Dynamics and Control, Elsevier, vol. 18(6), pages 1121-1142, November.
    7. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-947, October.
    8. Rotemberg, Julio J & Saloner, Garth, 1986. "A Supergame-Theoretic Model of Price Wars during Booms," American Economic Review, American Economic Association, vol. 76(3), pages 390-407, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Andrew Caplin & John Leahy, 1999. "Durable Goods Cycles," NBER Working Papers 6987, National Bureau of Economic Research, Inc.
    2. Srour, Gabriel, 1998. "The Sale of Durable Goods by a Monopolist in a Stochastic Environment," Staff Working Papers 98-18, Bank of Canada.
    3. Parker, J.A., 1997. "The Reaction of Household Consumption to Predictable Changes in Payroll Tax Rates," Working papers 9724, Wisconsin Madison - Social Systems.

    More about this item

    Keywords

    PRICING ; DEMAND ; FLUCTUATIONS;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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