PRICE DYNAMICS WITH CUSTOMER MARKETS

B-Tier
Journal: International Economic Review
Year: 2019
Volume: 60
Issue: 1
Pages: 413-446

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Using microdata from a U.S. retailer we document that customer turnover responds to pricing. We study the optimal price setting of a firm when its demand has an extensive margin that is elastic to price due to customers' opportunity to search for an alternative supplier. The price pass‐through of idiosyncratic productivity shocks is incomplete, with the most productive firms passing through more. Firm demand is more persistent than price. Higher demand is associated with lower markups due to higher search intensity, despite flexible prices. We find empirical support for these predictions in microdata from the retail industry.

Technical Details

RePEc Handle
repec:wly:iecrev:v:60:y:2019:i:1:p:413-446
Journal Field
General
Author Count
3
Added to Database
2026-01-28