How Businesses Set Prices—In Their Own Words

Wändi Bruine de Bruin (), Keshav Dogra, Sebastian Heise, Edward Knotek, Brent Meyer, Robert Rich, Raphael Schoenle, Giorgio Topa and Wilbert van der Klaauw
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Wändi Bruine de Bruin: https://www.cmu.edu/epp/people/faculty/wandi-bruine-de-bruin.html

No 20251124, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: There has been a lot of interest in firms’ pricing decisions in the past few years—both during the inflation surge of 2021-23 and in the more recent rounds of tariff increases. In this post, we let firms speak for themselves about what factors they consider when adjusting prices in response to various shocks. The analysis is based on an ongoing research project, joint with the Atlanta and Cleveland Federal Reserve Banks, on how businesses set prices and the extent of passthrough of cost increases. In particular, we leverage the qualitative portion of the study based on open-ended interviews with senior decision-makers on how they approach pricing decisions in their firms. Rather than a uniform approach, a very nuanced picture emerges of businesses trying to balance competing objectives while keeping an eye on demand conditions for their products as well as on their direct competitors’ behavior in the market.

Keywords: Price setting; cost pass-through; interview (search for similar items in EconPapers)
JEL-codes: D22 (search for similar items in EconPapers)
Date: 2025-11-24
New Economics Papers: this item is included in nep-com and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fednls:102159

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DOI: 10.59576/lse.20251124

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