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Price change synchronization within and between firms

Øivind Nilsen (), Håvard Skuterud and Ingeborg Munthe-Kaas Webster

Economics Letters, 2021, vol. 208, issue C

Abstract: This paper provides evidence on price rigidity at the product- and firm-level in Norway. A strong within-firm synchronization is found supporting the theory of economies of scope in menu costs. The industry synchronization effects are found to be small suggesting that firms either have some monopoly power, or that a firm’s costs of changing their own prices may be larger than the benefit of responding to their competitors’ price changes. These findings have potentially important implications for the micro-foundations of macroeconomic models, and thus the policy advice derived from such models.

Keywords: Price setting; Monthly micro data; Selection effects (search for similar items in EconPapers)
JEL-codes: C35 D43 E31 (search for similar items in EconPapers)
Date: 2021
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Working Paper: Price Change Synchronization within and between Firms (2021) Downloads
Working Paper: Price Change Synchronization within and between Firms (2021) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:208:y:2021:i:c:s016517652100344x

DOI: 10.1016/j.econlet.2021.110067

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