Price-setting Behavior in Russia: Study of Survey Evidence

Alexey Evseev and Farida Iskhakova
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Alexey Evseev: Center for the Study of Central Banking Studies of The Institute of Applied Economic Research, Moscow, Russia
Farida Iskhakova: Center for the Study of Central Banking Studies of The Institute of Applied Economic Research, Moscow, Russia

HSE Economic Journal, 2021, vol. 25, issue 3, 478–503

Abstract: Understanding the pricing behavior of firms at micro-level is the crucial aspect of effective monetary policy. This study implements the approach of direct survey of top management of firms about key pricing practices conducted by the Center for Sociological Research of the Institute of Social Sciences of the Russian Presidential Academy of National Economy and Public Administration in 2020. According to the survey results, firms typically set prices independently, and the most common pricing principle is cost-plus pricing. A large proportion of respondents (47%) adhere to strict regularity in price revisions, which could contribute to the persistence of inflation at the macro level. The frequency of price revision of the median firm is monthly, while firms from trade and construction industry, large firms, as well as firms with more than 20 direct competitors revise prices more often than other firms. The main reason for setting new prices is changes of firms’ costs. The existence of contracts with customers plays an important role in explaining price rigidity. An asymmetry in the reaction of prices to shocks of different nature and direction is revealed, and the factors of this asymmetry are considered.

Keywords: price rigidity; price-setting behavior; inflation stickiness; factors of price stickiness; economic shocks; asymmetric price rigidity; survey data (search for similar items in EconPapers)
JEL-codes: D40 E30 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:hig:ecohse:2021:3:6

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