Multiproduct firms and price-setting: Theory and evidence from U.S. producer prices

Saroj Bhattarai and Raphael Schoenle

Journal of Monetary Economics, 2014, vol. 66, issue C, 178-192

Abstract: Using micro-data on U.S. producer prices, we establish three new facts about price setting by multi-product firms. First, firms selling more goods adjust prices more frequently but on average by smaller amounts. Moreover, their fraction of positive price changes is lower and the dispersion of price changes is higher. Second, price changes within firms are substantially synchronized, which plays a dominant role in explaining pricing dynamics. Third, firms selling more goods have greater within-firm synchronization of price changes. A model with trend inflation and firm-specific menu costs where firms are subject to idiosyncratic and aggregate shocks matches the empirical findings.

Keywords: Multi-product firms; Number of Goods; State-dependent pricing; U.S. Producer prices (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (66)

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Related works:
Working Paper: Multiproduct firms and price-setting: theory and evidence from U.S. producer prices (2011)
Working Paper: Multiproduct Firms and Price-Setting: Theory and Evidence from U.S. Producer Prices (2011)
Working Paper: Multiproduct Firms and Price-Setting: Theory and Evidence from U.S. Producer Prices (2010)
Working Paper: Multiproduct Firms and Price-Setting: Theory and Evidence from U.S. Producer Prices (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:66:y:2014:i:c:p:178-192

DOI: 10.1016/j.jmoneco.2014.05.002

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