The Setting of Retail Prices in a Customer Market*

Ian McDonald ()

The Economic Record, 1990, vol. 66, issue 4, 322-328

Abstract: This paper extends the theory of the determination of retail prices in a customer market to a shop selling many types of goods. For a multi‐good shop, a discontinuous marginal revenue function for each good sold is derived. Under reasonable assumptions the size of this discontinuity depends only on the customer dynamics and is independent of own‐price elasticities and cross‐price elasticities. A discussion of the determination of producer prices shows how the theory can explain the relative stability of retail prices.

Date: 1990
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https://doi.org/10.1111/j.1475-4932.1990.tb01737.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:ecorec:v:66:y:1990:i:4:p:322-328

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