EconPapers    
Economics at your fingertips  
 

Prices under Innovation: Evidence from Manufacturing Firms

Jordi Jaumandreu and Shuheng Lin

No 13146, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study how ï¬ rms’ innovations impact prices with endogenous productivity and markup, under imperfect competition and dynamic pricing. Absent innovation, productivity plus markup changes curb price growth to half of variable inputs cost growth. Innovation’s additional impact on costs is negatively correlated with markup changes. We detect two prevalent strategies. When marginal cost goes down, ï¬ rms cash-in innovation by increasing the markups to enlarge proï¬ ts. When marginal cost goes up, ï¬ rms practice countervailing pricing by decreasing markups. With no innovation aggregate manufacturing price growth had multiplied by 1.4, but innovation without cash-in strategies had multiplied it by 0.8.

Keywords: Price indices; Marginal cost; Markup; Innovation (search for similar items in EconPapers)
JEL-codes: D43 L11 L16 O31 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-com, nep-cse, nep-eff, nep-hme, nep-ind, nep-ino and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP13146 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:13146

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP13146

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2025-03-19
Handle: RePEc:cpr:ceprdp:13146