On market power and inflation

Marc St-Pierre

Economics Letters, 2023, vol. 226, issue C

Abstract: We study the connection between inflation and market power in a partial equilibrium framework with both demand and cost shocks. We derive a specific condition under which cost shocks increase market power. Conversely, when the condition is not satisfied then it is demand shocks that increase market power. Moreover, exogenous changes in the degree of competition can either shrink or amplify the effect of either type shocks on equilibrium price. Our results complement those of Menezes and Quiggin (2022) and further enrich the recurrent debate surrounding the role of market power on inflation.

Keywords: Cost and demand shocks; Inflation; Market power (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S016517652300099X
Full text for ScienceDirect subscribers only

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:eee:ecolet:v:226:y:2023:i:c:s016517652300099x

DOI: 10.1016/j.econlet.2023.111074

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().