The Relative Rigidity of Monopoly Pricing
This paper seeks to explain why monopolies keep their nominal prices constant for longer periods than do tight oligopolies. We provide two possible explanations. The first is based on the presence of a small fixed cost of changing prices. The second, on small costs of discovering the optimal price. The incentive to change price for duopolists producing differentiated products exceeds that of a single monopolistic firm which produced the same tange of products as the duopoly.
|Date of creation:||Jun 1986|
|Date of revision:|
|Publication status:||published as American Economic Review, Vol. 77, No. 5, December 1987, pp. 917-926.|
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