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The pricing behaviour of firms in the euro area: new survey evidence

Author

Listed:
  • Fabiani, Silvia
  • Stahl, Harald
  • Kwapil, Claudia
  • Druant, Martine
  • Stokman, Ad C.J.
  • Landau, Bettina
  • Sabbatini, Roberto
  • Mathä, Thomas Y.
  • Loupias, Claire
  • Hernando, Ignacio
  • Martins, Fernando

Abstract

This study investigates the pricing behaviour of firms in the euro area on the basis of surveys conducted by nine Eurosystem national central banks, covering more than 11,000 firms. The results, robust across countries, show that firms operate in monopolistically competitive markets, where prices are mostly set following markup rules and where price discrimination is common. Around one-third of firms follow mainly time-dependent pricing rules while two thirds allow for elements of state-dependence. The majority of firms take into account past and expected economic developments in their pricing decisions. Price stickiness is mainly driven by customer relationships JEL Classification: E30, D40

Suggested Citation

  • Fabiani, Silvia & Stahl, Harald & Kwapil, Claudia & Druant, Martine & Stokman, Ad C.J. & Landau, Bettina & Sabbatini, Roberto & Mathä, Thomas Y. & Loupias, Claire & Hernando, Ignacio & Martins, Fernan, 2005. "The pricing behaviour of firms in the euro area: new survey evidence," Working Paper Series 535, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:2005535
    Note: 339070
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    More about this item

    Keywords

    inflation persistence; nominal rigidity; price setting; real rigidity; survey data;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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