 Der Zusammenhang zwischen Preisen, Kapazitätsauslastung und WettbewerbKOF Analysen, 2013, vol. 7, issue 1, 91-103 Abstract: Using unique product-level Swiss manufacturing panel data, we find the degree of competition among products to be an important determinant of price stickiness. The stronger the competition, the flatter is the slope of the so called micro Phillips curve, i.e. the weaker is the product-specific relation between price change and capacity utilization. The effect of a marginal increase in capacity utilization on the likelihood of a price increase is on average about 85% lower for products, that face very strong competition, compared to products, that face very weak competition. In line with the theory, prices of products, that face very strong competition, are also less likely to decrease in response to marginal decreases in capacity utilization. Moreover, it heavily depends on the degree of competition that a product faces whether, and to what extent, the micro Phillips curve is non-linear. The findings suggest that effective business cycle policy necessitates good competition policy. Reforms which strengthen the competition in an economy may make stimulus or stabilization policy more effective. Keywords: Price stickiness; Phillips curve; real rigidity; micro data (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:kof:anskof:v:7:y:2013:i:1:p:91-103 Access Statistics for this article More articles in KOF Analysen from KOF Swiss Economic Institute, ETH Zurich Contact information at EDIRC. |
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