Price Adjustment with Price Conjectures
We derive a measure of firm speed of price adjustment that is directly inversely related to market power and compare this to the measure derived by Martin (1993). However, both measures are incorrect when firms have price conjectural variations. This is because Taylor expansions of the demand function implicitly assume that firms influence the level of competing prices in a way that is consistent with their conjectures
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- Martin, Christopher, 1993. "Price adjustment and market structure," Economics Letters, Elsevier, vol. 41(2), pages 139-143.
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- Yetman, James, 2003. "Fixed prices versus predetermined prices and the equilibrium probability of price adjustment," Economics Letters, Elsevier, vol. 80(3), pages 421-427, September.
- Harry Bloch & Michael Olive, 2003. "Influences on Pricing and Markup in Segmented Manufacturing Markets," Journal of Industry, Competition and Trade, Springer, vol. 3(1), pages 87-107, March. Full references (including those not matched with items on IDEAS)
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