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Market Structure, Inflation, and Price Dispersion

Author

Listed:
  • Mustafa Caglayan
  • Alpay Filiztekin
  • Michael T. Rauh

Abstract

In this paper, we investigate the impact of market structure on the relationship between inflation and price dispersion. We first propose a new empirical model of the relationship between inflation and dispersion with firmer theoretical foundations, and then extend the basic model to incorporate the potential effects of market structure. We estimate the basic and market structure specifications using a unique micro-level data set from Istanbul, which consists of monthly price observations from three different store types: convenience stores, open-air markets, and supermarkets. Our empirical findings support almost all of the basic and market structure predictions.

Suggested Citation

  • Mustafa Caglayan & Alpay Filiztekin & Michael T. Rauh, 2004. "Market Structure, Inflation, and Price Dispersion," Discussion Papers in Economics 04/2, Division of Economics, School of Business, University of Leicester, revised Jun 2004.
    • Handle: RePEc:lec:leecon:04/2
    as

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    File URL: https://www.le.ac.uk/economics/research/RePEc/lec/leecon/dp04-2.pdf
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    References listed on IDEAS

    as
    1. Van Hoomissen, Theresa, 1988. "Price Dispersion and Inflation: Evidence from Israel," Journal of Political Economy, University of Chicago Press, vol. 96(6), pages 1303-1314, December.
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    Keywords

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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