New Product Introductions and Price Markups

Kostas Axarloglou () and Demetrios Tsapralis
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Kostas Axarloglou: ALBA
Demetrios Tsapralis: J.P. Morgan & Co.

Eastern Economic Journal, 2004, vol. 30, issue 2, 223-235

Abstract: The present study contributes to the literature of countercyclical price markups (real price rigidities). Specifically, it discusses the relation between new product introductions and industry and aggregate demand fluctuations, as well as their impact on firms' pricing policies, and in particular on price markups. Devinney [1990] shows that the introduction of new products happens mostly at the beginning of the business cycle, while Axarloglou [2003] explores the seasonal and non-seasonal properties of new product introductions in U.S. manufacturing. The present study extends this literature by showing that price markups decline in response to new product introductions, and since new product introductions vary in a procyclical manner, price markups can be countercyclical.

Keywords: Prices (search for similar items in EconPapers)
JEL-codes: E42 L11 L16 M31 O34 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (1)

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